Update 2/22/2010: Citi's website now states the maximum CD deposit is $5,000.
This is one of the more unusual ways that I've seen to get a high CD rate. Citibank is offering a Citi Secured MasterCard which is intended for those who need to build their credit histories. It requires that you open an 18-month CD when you apply for the secured credit card, and your credit limit will be equal to the amount of money in your CD. It looks like they set the CD rate last year, and they haven't changed it since. Thus, the CD rate is now way above the market rates. As of 8/06/09, the rate is 4.00% (4.07% APY). Minimum deposit is $200, and the maximum is $25,000.
You can see the rate online by clicking the disclosure link at the bottom of the Citi Secured MasterCard page. The 4.07% APY is listed as of 8/06/09. The date on the disclosure is April 2008, so I called Citi at 1-800-726-2109 (found the number by clicking question mark to the right of the PDF application link). According to the CSR, this rate is still valid. The CSR was just going by what he was seeing, and he wasn't able to provide many details of this CD. So I would be concerned about Citi opening the CD with a lower rate. However, it's possible that the credit card division didn't give much thought about CD rates. It may be an example of an oversight by the bureaucracy of a large company. If that is the case, hopefully they won't notice a surge of $25K new CD deposits, and this deal will last for a while.
The downside with the secured credit card is that there's an annual fee of $29. But if you deposit $25,000, the fee is small compared to the extra interest. Citibank's current 18-month online CD has a 2.25% APY (which is competitive). In 18 months, you'll earn around $650 more in the 4.07% CD vs. the 2.25% CD for a $25K deposit.
To apply for the credit card and CD, there's a PDF application link at the bottom of the Citi Secured MasterCard page. You have to print and mail the application with a check for the CD. Instructions are at the top of the application.
Citibank CD Specials:
If you don't trust Citi with this secured credit card CD, you might still want to consider Citibank's CD specials. The rates are nothing to get excited about, but some of them are competitive. The only competitive one online as of 8/06/09 is the 2.25% APY 18-month CD. For other terms, you may be able to get higher rates at a Citibank branch. I posted on these last month. Citibank was recently advertising in many cities an in-branch 12-month CD special with a 2.00% APY. Minimum deposit is $500, and no checking is required. This is the same rate as the 12-month branch special that I reported on last month. I called Citibank's national number (1-800-627-3999) to try to get an update on these branch specials, but this time the CSR said I had to call the individual branches. Last month the CSR had access to these branch rates, and I only had to provide my zip code or state.
For more details on Citibank's CDs, please refer to my July Citibank post. Citibank is a member FDIC (FDIC Certificate # 7213).
Credit for this find goes to FW member motsuka who mentioned it on this FW thread and thanks to the readers who have mentioned it the comments.
Other Competitive Certificate of Deposit Rates