As I mentioned last week iGObanking.com is offering a very competitive rate of 2.25% APY on its 2- and 3-year CDs. In addition, iGObanking.com's CD gift site, GiftsforBanking.com is offering a similar competitive CD rate which is just a little bit lower, 2.00% APY for 2- and 3-year terms. These rates are still listed at the bank's websites as of 10/28/2010.
Even the lower rate at GiftsforBanking.com is significantly higher than the next best 2-year internet CD rate (1.79% APY at Bank of Internet USA).
Is the gift that you receive at GiftsforBanking.com worth the 25 basis points?
I reviewed GiftsforBanking.com in this March 2010 post. Here are some important details. Minimum deposit is $5,000, and the free gift will depend on the term and size of your deposit. There are five balance tiers: $5K, $10K, $25K, $50K and $100K.
Some important details mentioned in the small print on GiftsforBanking.com's front page include:
- A 1099-INT statement for the gift amount (including applicable sales tax and delivery costs) will be issued.
- Additional expenses may be incurred for delivery of gifts outside the Tri-State area.
The main downside with receiving gifts from a bank instead of cash is that the value reported to the IRS may be more than the gift is really worth.
Another downside to the gift in this case is that it makes the early withdrawal penalty more costly. Here is what is stated in the bank's disclosure:
If your account has an original maturity of one year or greater:
* The fee we may impose will equal six months simple interest on the amount withdrawn subject to penalty.
* Plus the retail value of the gift received, applicable sales tax and shipping fees.
So be sure to consider the above downsides before choosing GiftsforBanking.com.
The benefit of going with GiftsforBanking.com instead of iGObanking.com is that the gift will be more valuable to you than the extra 25 basis points. For a 2-year CD with a $10K deposit, the 25 basis points equal about $50 over two years.
I reviewed the gifts available for a 2-year $10K CD. Here are some of the gifts the site listed:
- TOMTOM Automobile portable navigator
- 7-inch portable digital TV/DVD player
- Samsonite Silhouette 11 Softside 22-inch Upright Spin
- Dewalt 18V Cordless Wet/Dry Portable Vac
- Nikon CoolPix S3000 digital camera
- Ironman Triathlon Bodylink System
- 16GB Flash Portable Media Player
- Sony 10.1 MP Cybershot digital camera
And here are some of the gifts that the site listed for a 2-year $100K CD:
- LG 47-inch LCD Bose 3-2-1 GS Home Entertainment Set
- Royal Carribean 6&7 Night Bronz Certificate
- Cannon EOS 7D digital camera
- BowFlex Revolution FT Home Gym
- 3 Night Ritz Carlton Royal Prestige Suite Award
- Samsung 46-inch LED High-Definition TV with 1080p resolution
- Hitachi Handyman Project Center Tool Package
- Callaway Diablo Edge Golf Set
- Poulan 18.5 HP Lawn Tractor
- 5 Night Marriott Premier Stay and Spa Package
- iPad Urban Electronics Package
- Endurance Elite Folding Treadmill
According to the instructions, you'll receive a personalized link to a catalog containing all the gifts that are shown at GiftsforBanking.com after you have opened and funded your account. You will be requested to choose your gift and fill out the required shipping information.
I would guess these Gift CDs have similar features and a similar application process as the iGObanking.com's CDs. Please refer to my iGObanking.com CD review that I posted last week.
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
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