Update 6/08/2010: According to the bank's CSR, the 16-month CD rate is now 1.65% APY. The CSR can be reached at 1-866-395-8693.
Even though DollarSavingsDirect is no longer listing CDs on its front page, it's still offering the 2.25% APY 16-month CD. When I was updating the rates on Saturday, I noticed the CD info was removed. I just called DollarSavingsDirect, and the CSR confirmed that it's still available as of today (8/24/09). He said he hasn't heard of any rate cut, and they typically inform the reps 1 or 2 days before the cuts. They also have a 2.50% APY 5-year CD, but that's not nearly as competitive as this 16-month CD.
To open a CD at DollarSavingsDirect, you must first open the savings account. Once the savings account is opened and you've verified the external linked checking account, you can log into your account and complete an online CD application. Refer to the bank's FAQ for more details.
If you're going to open the savings account so that you can open this CD, the CSR said it's best to plan to fund the CD using money from your linked checking account. You can also use the money in the savings account to fund the CD. However, a reader in a previous post mentioned that when she opened the savings account, they put a long hold on the funds which prevented her from opening the CD before the rate fell.
Certificate of Deposit Details
Details about DollarSavingsDirect's CDs are provided in this FAQ and in the account disclosure. A few important points regarding the CD include:
- Must already have DollarSavingsDirect savings account to open CD (The savings account has no minimum balance fees so there's little downside to this)
- $1,000 minimum balance is required to establish a CD and to earn the APY disclosed
- Interest will be compounded on a daily basis and credited to your CD on the last day of the month and at maturity
- Early withdrawal penalty for a 16-month term is an amount equal to 180 days interest (whether earned or not)
- You may withdraw your posted interest at any time by transferring the money back to your linked funding account
- 10 calendar day grace period at CD maturity in which you can close the CD without a penalty
- If you choose to close your CD Account, no interest will be earned during the grace period
Emigrant Bank started DollarSavingsDirect in August 2008. Refer to my review of DollarSavingsDirect for more details. Like many banks these days, Emigrant decided to create a new savings account with high rates rather than raising the rate on its existing savings account at EmigrantDirect. Unfortunately, if you're an EmigrantDirect customer, you have to go through the entire new-account process at DollarSavingsDirect.
DollarSavingsDirect and EmigrantDirect are divisions of, Emigrant Bank which has been a FDIC member since 1934 (FDIC Certificate # 12054). Emigrant Bank is based in New York, NY. It's a fairly large bank with $13.5 billion in assets and $9.6 billion in deposits based on 3/31/09 FDIC data.
It's interesting to note that they replaced the CD info at DollarSavingsDirect.com with a link to "real estate opportunities." When you see a bank advertising this, it probably means they have a lot of foreclosed properties which doesn't bode well for a bank's financial health. Emigrant Bank's financial ratings are weak: 0 star (lowest) at BauerFinancial and 1 star (lowest) at Bankrate.com. Both ratings are based on 3/31/09 financial data. As with any bank, it's best to stay under the FDIC limit. Remember that deposits at Emigrant Bank, EmigrantDirect and DollarSavingsDirect would be added together to determine FDIC insurance coverage.
01/27/10: 1.65% APY 16-month CD
08/24/09: 2.25% APY 16-month CD