Sovereign Bank is offering two special CDs. The one with the most competitive rate is the 5-year CD which has a 3.00% APY. The other one is a 1.25% APY 18-month CD. Both have a minimum deposit of $500. The 5-year CD special is listed on the bank's front page and in this bank's promotion page as of 2/10/2011. The 18-month CD special is listed on the bank's CD page.
Sovereign Bank CD Details
Update 2/12/11: Readers have informed me that they've been told that the CD is available nationwide. I called Sovereign again using the number listed in the application (877-860-9753). The CSR checked with her supervisor and confirmed that their new policy is to allow anyone in the nation to open CDs. Checking and savings accounts continue to be limited to their market area.
Regarding the early withdrawal penalty, this CSR repeated what I was told on Thursday. For a 5-year CD, the penalty is 12 months of interest. I asked if they had an account disclosure available online or if they could email me a copy. She could not provide one, and she said I would receive one in the mail after the application. As one reader mentioned in the comments, it's hard to believe they assume customers don't need to read this before opening the CD.
If you don't live near a branch, applying by phone appears like it would be easier and quicker than applying online. According to the CSR, they call you after you apply online to confirm your information. The rate should lock at the time of the application.
This ends the 2/12/11 update.
I called Sovereign (877-768-2265) for more details on these CDs. According to the CSR, accounts are limited to customers in their market area (includes much of the Northeast). I was told the early withdrawal penalty for the 5-year CD is 1-year of interest (I couldn't find the disclosure online). There's an online application, and I was told you can fund the CD with an ACH transfer which should allow you to receive the CD rate at the time you submit the application. When the CD matures, they don't have a lot of options to receive the funds. Neither ACH nor wire transfer is an option. In addition to having the check mailed, you can have them transfer the funds into your Sovereign liquid account or you can receive a check at a branch.
How It Compares
This 5-year CD special compares very favorably to 5-year CDs available nationwide. As of 2/10/2011, the best nationwide 5-year CD rate is 3.00% APY at Connexus Credit Union (requires an active checking). The best rate at a bank is 2.75% APY at Salem Five Bank.
Triple Your Interest Savings
Sovereign Bank offers a special savings account called Triple Your Interest Savings. As you might expect, the rates are low compared to internet savings accounts, but if you get the triple-rate feature, it's not bad for brick-and-mortar banks. To get the triple rate, it requires that you had automatic transfers of $100 or more for the previous month. The automatic transfers have to be from a Sovereign Checking account. When you meet this, the interest rate is 0.90% APY. The automatic transfers also prevent a monthly maintenance fee.
The bank doesn't offer free checking accounts for non-student accounts. The best one is the Sovereign Classic Banking which requires a minimum balance of $500 to avoid a $5 monthly fee.
Sovereign Bank Overview
Branches are located in the Northeast in the states of Connecticut, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania and Rhode Island.
Sovereign Bank is the 25th largest bank in the nation. It's part of the Spanish bank holding company, Banco Santander, S.A. Sovereign Bank has $72 billion in assets and $41 billion in deposits. It has an overall health score at DepositAccounts.com of 4 out of 5 with a Texas Ratio of 15.71% (excellent) based on September 2010 data. Please refer to our financial overview of Sovereign Bank for more details. The bank has been a FDIC member since 1938 (FDIC Certificate # 29950).
Searching for the Best CD Rates
To search for the best nationwide CD rates and the best CD rates in your state, please refer to the CD rates section of DepositAccounts.com.