Update 3/17/2011: The internet CDs are no longer available.
Incredible Bank is the latest rate leader to cut rates this week. Its checking account yield fell from 1.35% to 1.21% APY effective today (3/4/2011). The yield applies to balances up to $250K. The second tier rate also dropped (1.00% to 0.80%). This applies to the portion of the balance over $250K. The 1.35% APY had held since December 8th.
The rate drop is disappointing, but the account has remained competitive since it launched in November 2009. I have the rate history at the bottom of my Incredible Bank checking account review.
The only way to prevent a rate cut is to lock in money into a CD. Fortunately, Incredible Bank CD rates didn't go down. They're still very competitive: 1.55% APY for 18 months and 1.45% APY for 12 months (as of 3/4/2011). I reviewed these CDs and new rates last month.
I called Incredible Bank (877.261.4750) this morning to confirm these CD rates. One nice surprise is that a CSR answered immediately. According to the CSR, the CD rate should lock at the time you submit your application. The CD can be funded with an ACH transfer. With funding by an ACH transfer, you provide the routing number and account number of your account at another bank. I was told you would have do this also if you want to fund the CD with your Incredible Bank checking account. At maturity, if you don't want to renew, they can do an ACH transfer back to the source account.
Incredible Bank Overview
Incredible Bank is a division of River Valley Bank which is based in Wisconsin. The bank has $956 million in assets. Its health scores went down a little when new data came out in December. Its overall health score at DepositAccounts.com is 3 stars (out of 5) with a Texas Ratio of 25.23% (average) based on December 2010. Please refer to our financial overview of Incredible Bank for more details. The bank has been a FDIC member since 1967 (FDIC Certificate # 19772).
How Do These CD Rates Compare?
You can get CD rates that are a little higher at a couple of credit unions that are easy to join as of 3/4/2011. The 2.00% 12-month CD at Justice FCU has ended. However, Connexus Credit Union is still offering 1.75% APY 12-month CD, but this requires an active checking account. RTN Federal Credit Union is still offering 1.55% APY for 1-year, but this has a minimum deposit of $50K.
For the 18-month CD, Alliant Credit Union has the same 1.55% APY, but this requires a $25K minimum deposit.
The other alternative is going long on CDs and depending on a mild early withdrawal penalty. This does have some risk as I described in my post risks and benefits of long-term CDs. The 5-year CD at Ally Bank continues to be the best deal for this strategy. I described the effective yields if you close Ally Bank CDs early in this Ally Bank CD review.