Dedicated to Deposits: Deals, Data, and Discussion

4.00% 36-Month CD & 2.75% 18-Month CD at Darby Direct - Georgia Only


Darby Direct
Update 9/12/09: This special 36-month CD is scheduled to expire on September 23, 2009.

Darby Direct is offering two hot online CD deals: a 2.75% APY 18-month CD and a 36-month step-up CD with an average APY of about 4.00%. There's also a 9-month CD special, but the rate is much less competitive with a 1.25% APY. Minimum deposit is $500. The promotions are listed at the bank's CD page as of 8/15/09.

The step-up CD starts with 3% APY the first year and goes up to 4% APY the second year and 5% APY the third year. According to the small print, the rate changes will occur on 8/15/2010 and 8/15/2011. Additional details are listed in the CD disclosures. One significant issue is a severe early withdrawal penalty of 365 days of interest. Another downside is that the interest will be credited to the account annually. Grace period at maturity is 10 days.

Update: The CD now allows the customer to make a penalty-free early withdrawal on each anniversary date. The customer will be granted a 10-day grace period during which any or all of the funds may be withdrawn without penalty (see post for more details.)

The 18-month CD has an early withdrawal penalty of 6 months of interest. The crediting of interest and the grace period are the same as the 36-month CD.

A reader who has a Darby Direct savings account forwarded an email he received from Darby Direct about these CDs. The deal may only be for existing Darby Direct customers. However, from the website it appears to be available to new customers. I wasn't able to reach a CSR before the weekend. I'll check on Monday. One thing that is clear from the website is that only Georgia residents are eligible. However, I'm not sure if you have to be a Georgia resident if you're an existing Darby Direct savings account customer.

Update 8/17/09: According to the CSR, new customers who are Georgia residents and all existing customers are eligible for these CDs. Also, the CSR confirmed the add-on feature that was mentioned in the disclosure: "You may make unlimited deposits into your account. ... The minimum amount you can deposit is $500." Refer to section "Additions to Account" on page 2 of the disclosure.

Darby Direct launched a new internet savings account last April with a 3.00% APY. At first it was available nationwide, but in less than a month, the bank restricted new accounts to only Georgia residents. Unfortunately, this has become common this year as banks offering good nationwide deals quickly meet their deposit targets (see post). For more info about Darby Direct and this savings account, please refer to my April Darby Direct review.

Darby Direct is an online division of Darby Bank & Trust Co., and accounts at Darby Direct are FDIC insured (FDIC Certificate # 14580).

Another potential issue is that Darby Bank doesn't have the best ratings for safety and soundness: 1 star (lowest) at and 3 stars (adequate) at BauerFinancial. Both ratings are based on 3/31/09 financial data. The Bankrate rating used to be 2 stars (below peer group) when it was based on 9/30/08 data. With the high numbers of Georgia bank failures this year, some may be suspicious of financially weak Georgia banks offering top deposit rates. If you stay under the FDIC limit, there should not be a concern of losing money. However, if a bank fails during the term of a CD, the new bank that assumes the deposits may decide not to honor the CD rate to maturity. In that case you would be free to make a penalty-free early withdrawal and you would receive the accrued interest. As many are finding out in recent months, losing a rate lock can be painful in a low interest rate environment. It's also more painful for a step-up CD since you would not benefit from the high rates in the later years. I assume the FDIC or the acquiring bank would only pay interest for the rate in effect at the time of closure.

Thanks to the readers who emailed me and commented on this CD special

Other Competitive Certificate of Deposit Rates

Another attractive Georgia CD deal is at Bartow Bank which is offering a 3.00% APY 15-month CD special (used to be 9-month). Unlike Darby Direct, it's limited to only a couple of Georgia counties (see post). For other competitive CD deals available nationwide and in other parts of the nation, refer to the following:

  Tags: Darby Direct, Georgia, CD rates

Related Posts

Comment #1 by Tuphat (anonymous) posted on
It seems strange for a "direct" online bank (or banking division) to geographically restrict customers, since the sole methods of customer interactions are internet and phone. One possible explanation would be regulators' disdain for "hot" money, and their perception that out-of-area deposits would constitute same.

Comment #2 by Foggy (anonymous) posted on
I am a California resident and holder of an existing Darby Direct Savs acct (applied before they limited these accts to Georgia residents). I received this same email and went online to complete part of the application for the 36 mo step up see if they'd allow me to open this. I did not get rejected so far, but I did not complete the application yet.

Also, I noticed on the application that the 3 CD's described in the email PLUS 3 JUMBO CD's are offered, but I couldn't find any info as to what the JUMBO means...the application still shows $500 min for the JUMBO when I went through the online application steps up to funding point, and the disclosure does not specify what JUMBO means in this case.

Also, the disclosure states that unlimited additional deposits of $500 min can be made, if I'm reading this correctly! Therefore, maybe I'll open a small balance and then decide whether to increase or not.

Comment #3 by Anonymous posted on
quick question, i have a darby-direct savings account, is there a limit to the number of beneficiaries i can have for this POD account?
i currently have 4 beneficiaries, and i want to increase it to 6.
also can the beneficiary be under 18 yrs old?


Comment #4 by Anonymous posted on
When you "do the math", the effective yield is about 4.2% yearly with compounding... not bad at all for a 3 year CD given today's interest rate environment, even considering the possibility (probability) of rate increases in the future due to inflation, which should take a couple of years at least, in my opnion.
All depends on the bank staying afloat, which in GA these days, is no guarantee.

Comment #5 by Anonymous posted on
Existing Darby Bank customers are eligible to open these CDs.

Comment #6 by Anonymous posted on
I called to speak to a CSR since the online application process limited me to a maximum of $10,000 into a CD. I was told that is the policy for a new customer. HOWEVER, Darby allows unlimited additional deposits to an existing CD (not that I would want to go above the FDIC limit), with a minimum daily deposit of $500, and a monthly maximum of $25,000.
That's pretty awesome!

Comment #7 by Anonymous posted on
Forgive me if this sounds pessimistic. I know any bank can go under at any time, and my concern is not insured limits, but rather the following:

We know that if a bank fails and is taken over, the new bank doesn't have to honor CD terms (interest rate lock), that also is not my main concern.

The concern is the interest is only credited ANNUALLY for Darby, and again only in the case of failure. Think of the following example:

I open a CD today (August 2009) for $100,000. So interest should be credited in August 2010. Fair enough.

Suppose bank fails in July 2010. Does/can aquiring bank and/or FDIC say, here's your $100,000, but so long to your 11 months of accrued but unpaid interest?

Comment #8 by Anonymous posted on
The question about accrued interest if a bank fails got me to wondering also, so here's something I found on the net which addresses the issue, and should allay one's fear.

Comment #9 by Foggy (anonymous) posted on
Regarding issue of whether FDIC will pay accrued (earned) but unpaid interest up to date of bank failure:
I called FDIC (1-877-275-3342) about this a few months ago because I have CD's like this, and rep stated very clearly that YES, they do pay the accrued interest.

Comment #10 by Brenda (anonymous) posted on
I contacted Darby for clarification on their "Jumbo" CD. Here is the response I received:

"The rates and terms for a Regular CD and a Jumbo CD are the same. The minimum deposit for a Regular CD is $500.00. The minimum deposit for a Jumbo CD is $100,000.00. The maximum deposit for a Regular CD is $99,999.99. There is no maximum deposit for a Jumbo CD."

Comment #11 by Anonymous posted on
- Just received email from Darby -

Our Best Deal Just Got Better!

10 day grace period at end of each year now available with penalty free withdrawals

For the current 36mo 3%/4%/5% step-up CD

Comment #12 by Dave (anonymous) posted on
This was surprisingly easy to sign up for, given I am an existing customer with an Online Savings account (snuck in before they stopped accepting residents outside of GA).

You can fund your CD with money from your Darby Online Savings account, and it is created instantly. Not bad for a Saturday.

Signup was pretty easy, you get an account number at the end of the process and then you have to login and "Add Account" to view it online. Sure enough, the CD was visible in my list of accounts and the funds were withdrawn from my old savings account.

The offer seemed too good to pass up, what with the Online Savings 3% rate guarantee ending as of September 30. Now with the money in the CD, I'll have locked in the 3% interest rate for the next year, with the option of withdrawing at the end of the first year or letting it go up to 3 years for an average of 4.1586% APY to be precise.

Not bad given the current rate climate with rates scheduled to be low for many months ahead.

The bonus of being able to ADD money to a CD makes this a good offer. If rates stay low for the next few years, you can continue to plough money into this CD earning a good rate. If not, withdraw in 12 mo penalty free. Can't go wrong with that.

Let's just keep our fingers crossed the bank stays solvent :)

Comment #13 by CornHusker (anonymous) posted on
Just received email, they will offer 2.5% 18mo BREAKABLE CD