iGObanking recently made a major increase in the rate of its 2-year CD. It went up by a half of a percentage point to 2.25% APY. Minimum deposit is $1,000. It's also available in an IRA. This rate is listed in iGObanking's rates page as of 10/20/2010.
As a comparison, the next best 2-year internet CD is at Bank of Internet USA with a yield of only 1.79%. You might also want to compare it to Ally Bank's 5-year CD. If you close Ally's 5-year CD at year 2, you'll be charged an early withdrawal penalty of 60 days of interest. Ally's 5-year CD currently has a 2.49% APY. After you factor in the 60-day penalty, the effective yield at year 2 would be about 2.29%. So iGObanking's 2-year CD compares favorably even to Ally Bank's 5-year CD.
Every now and then iGObanking comes out with a good CD deal, but you have to be careful when the CD matures. Many of the CD rates are not competitive. So if you let your CD automatically renew, you may get stuck with a low-rate CD. A current example is the 1-year CD which has a yield of only 0.50% APY.
There's an online application for the regular CDs that allows electronic funding via ACH. However, when you close the CD, they don't seem to provide a way to transfer it out via ACH. When I spoke with a CSR in 2008, I was told that you can request for them to send you a check via their secure email. You also have the option to transfer the money into your iGObanking savings or checking account.
It should be noted that a few readers have not been happy with the service they have received from iGObanking. You can read about their experiences in the comments of my February iGObanking post and in our iGObanking reviews section.
The certificate of deposit details are described in the bank's disclosure page. The early withdrawal penalty for CDs with terms of one year or over is 180 days of interest. The disclosure does give them the right to refuse an early withdrawal of principal:
You may make withdrawals of principal from your account before maturity only if we agree at the time you request the withdrawal.
The grace period after maturity in which you can close the CD without penalty is 7 calendar days.
Update: A reader noted that iGObanking's GiftsforBanking.com is offering a 2.00% APY on its 2-year CD. The gift that comes with the CD could be more valuable than the 25 bps on the CD. Please refer to my GiftsforBanking review for more details on this program.
My previous iGObanking reviews:
iGObanking.com is a division of Flushing Savings Bank, FSB, a New York bank with $4.26 billion in assets and 16 branches. The bank's overall health score at DepositAccounts.com is 3 out of 5 with a Texas Ratio of 25.99% (above average) based on 6/30/2010 data. It has been a FDIC member since 1943 (FDIC Certificate # 16049).
Searching for the Best CD and IRA CD Rates
To search for the best nationwide rates and the best rates in your state, please refer to the following sections of DepositAccounts.com: