Salem Five Bank is offering three special CDs: a 2.75% APY 5-year CD, a 1.50% APY 2-year CD and a 1.35% APY 14-month CD. Minimum deposit is $10K for a regular CD and $2K for an IRA CD. These CD rates are listed in the bank's account rates page as of 12/15/2010. According to a bank rep, rates changes are typically made on Tuesdays so these rates will likely last at least until 12/21/2010.
Certificate of Deposit Details
These CDs can be opened online by people in any state. I contacted the bank yesterday and received confirmation of this. According to the CSR, the CD rate will lock at the time you submit the application. The CD can be funded with an ACH transfer from an account at another bank. They will mail you a signature card.
When a CD matures, I was told they require written instructions if you don't want to renew. They can mail you a check or perform a wire transfer. Domestic outbound wire transfers cost $20.
One downside to Salem Five's long-term CDs is a severe early withdrawal penalty. For a 60-month term, it's 15 months of interest. The penalty for the 14-month and 24-month CDs is 6 months of interest. Please refer to their CD Disclosure for more details.
Compared to CDs at Other Banks and Credit Unions
As compared to internet banks, the best 5-year CD rate is 2.55% APY at EverBank as of 12/15/2010. For credit unions which are easy to join, the best 5-year CD rate is 3.00% APY (requires an active checking) at Connexus Credit Union and 2.93% APY (no checking required) at Melrose Credit Union.
Salem Five Direct
This bank also offers an online savings and checking account at Salem Five Direct. The eOne Savings account has a 1.10% APY on all balances and the eOne Checking has yields of 0.60% to 0.65% APY. It's hard to believe that this checking account had an APY of up to 5.30% back in 2007.
Unlimited Deposit Insurance (FDIC + DIF)
One advantage that Salem Five over some other banks is that it has private DIF insurance which combines with FDIC insurance to fully cover all deposits. Salem Five's overview of DIF explains DIF. Here's a useful excerpt:
Deposits at Salem Five in excess of the standard insurance amounts provided by the FDIC and the temporary full FDIC insurance coverage for noninterest-bearing transaction accounts are covered by the Depositors Insurance Fund (DIF). The DIF is a private, industry-sponsored insurance fund that insures all deposits above FDIC limits at Massachusetts-chartered savings banks. The DIF was established by the Massachusetts legislature in 1932 and has been insuring deposits since 1934. No depositor has ever lost a penny in a bank insured by both the FDIC and the DIF.
The bank has an overall health score at DepositAccounts.com of 4 out of 5 with a Texas Ratio of 14.47% (excellent) based on September 2010 data. It's a sizable bank with $2.80 billion in assets. Please refer to our financial overview of Salem Five for more details. The bank has been a FDIC member since 1981 (FDIC Certificate # 23296).
Searching for the Best CD Rates
To search for the best nationwide rates and the best rates in your state, please refer to the following tables at DepositAccounts.com: