It has been a while since I had anything to report on E-LOAN. This internet bank became popular back in 2006 when they launched an internet savings account with a 5.50% APY. There were hopes they would remain competitive, but that didn't happen. The financial crisis hit E-LOAN's loan business, and that appeared to impact the internet bank. The savings account rate suffered, and now the top rate is only 0.65%.
In addition to a savings account, E-LOAN also offered internet CDs with terms from 1 month to 6 years. Like the savings account, the CD rates have rarely been competitive in the last few years. However, every now and then something worthwhile pops up. That is the case now. E-LOAN has just recently raised its 9-month and 12-month CD rates to levels that are competitive. These rates as listed at E-LOAN's interest rates page as of 5/30/2011 are:
- 1.26% APY 1-year CD, min $10K
- 1.05% APY 9-month CD, min $10K
How These Compare
These aren't great rates, but they are competitive in today's low interest rate environment. Only three internet banks are offering higher 1-year CD rates: Doral Bank Direct (1.40%), Alostar Bank, formerly Nexity (1.31%) and MetLife Bank (1.30%). The best 1-year CD rates are from credit unions. The highest is 1.75% APY from Connexus Credit Union, but this requires an active checking account. The highest without a checking account requirement is 1.41% APY at Melrose Credit Union. Both of these credit unions have easy eligibility requirements that make it easy for anyone to join.
It might seem odd that a 1.05% APY 9-month CD is competitive, but I'm afraid that is the case today. For those looking for short-term CDs, there are better options than the standard 9-month or 6-month CDs. There are still two more days left for Salem Five Direct's savings account promotion in which they are guaranteeing 1.25% APY until April 1, 2012. When this promotion ends, Ally Bank's 11-month No-Penalty CD will go back to being the best short-term CD deal. As I described in my Ally Bank CD review, this CD can have essentially any term under 11 months that you want.
Details on E-LOAN Bank CDs
I opened two E-LOAN Bank long-term CDs back in 2007 when the Fed first started to cut rates. At that time I didn't think we were headed into the interest-rate "great depression", and I made the mistake of splitting my money between a 2-year CD and a 5-year CD. The 5-year CD had a 5.55% APY so I wished I had put everything into the 5-year CD (or perhaps a 6-year CD).
One benefit of the 2-year CD is that it allowed me to test the E-LOAN CD closure process. The nice thing about E-LOAN is that both the CD funding and disbursement are done with an ACH to your linked external account. Before my 2-year CD matured, I logged in and specified to close the CD at maturity and have the funds transferred to my linked checking account. That took place without any problems. I was told by an E-LOAN CSR that instructions to close a CD can also be made during the grace period. I have more details on this in my E-LOAN CD review.
Not all readers had this same experience closing an E-LOAN CD. There have been complications. As I mentioned in that E-LOAN CD post, there can be complications if you need to change your linked checking account. One reader posted this in the comments of that post:
They made up rules at the last minute that were not part of the disclosure -- like they would not allow me to change my external account within seven days of maturity -- nothing in the disclosure about that, and you only find out when you try to do it (I tried it five days in advance, after being told on the phone three weeks before that that I could do it right up until the CD matured). And that was only one of several things they threw up to block me from closing and getting my money -- none of it in the disclosure.
All deposit accounts offered through E-LOAN are opened through Banco Popular North America (BPNA), a New York state chartered bank that is the direct parent company of E-LOAN. Thus, your deposits opened at E-LOAN and directly at Banco Popular are combined for purposes of FDIC coverage. BPNA has been a FDIC member since 1999 (FDIC Certificate # 34967).
Banco Popular North America is a sizable bank with $9 billion in assets. Its financial ratings are a little low: 3 stars (out of 5) at DepositAccounts.com with a Texas Ratio of 24.58% (average) based on March 2011 data. Please refer to our financial overview of E-LOAN/BPNA for more details.
Comparing CD Rates
To search for the best local and nationwide CD rates, please refer to the CD rates section of DepositAccounts.com.