I know many don't think callable CDs are good deals, but in today's environment, can they be a reasonable choice? You may ask that question for the long-term callable CDs that MidFirst Bank is offering. The most competitive rates have 7-year terms. The rate is 3.20% APY for a 1-year lock and 3.10% APY for a 2-year lock. That means the bank guarantees that it won't call the CD early before the lock period ends. The fixed rate 7-year CD that is not callable has a 2.70% APY. The callable CDs have a $5,000 minimum deposit and the fixed rate CDs have a $1,000 minimum. The rates are listed at the bank's CD and IRA page as of 6/21/2011. Note, you have to enter your zip code to see the rates. Slightly higher rates are listed for Arizona (3.25% APY 7-year callable CD with 1-year lock).
The 7-year CD early withdrawal penalty is harsh. According to the CSR, it's 24 months of interest. That applies to both the regular and callable CDs.
Local Deal Only
According to the CSR, new customers must come into a branch to open an account. MidFirst Bank branches are located in Phoenix, Arizona and in several cities of Oklahoma including Oklahoma City, Shawnee, Tulsa and Yukon.
MidFirst Bank is a sizable bank with $10.34 billion in assets. The bank has an overall health score of 3 stars (out of 5) with a Texas Ratio of 26.87% (average) based on March 2011 data. Please refer to our financial overview of MidFirst Bank for more details. The bank has been a FDIC member since 1934 (FDIC Certificate # 4063).
When is a Callable CD a Good Deal?
Callable CDs would have definitely been bad deals in the past 3 years. In the falling rate environment, the CDs would have very likely been called and the depositor would have lost the high rate lock.
If rates have reached the bottom, callable CDs seem to be a better deal. In this case, if the CD is called early, you can reinvest the money in another CD with the same or higher rate. If the CD isn't called, it's no worse than a regular CD.
Of course we can't predict future rates, and even though it seems we must be near the bottom, rates could continue to fall. Many had thought we were near the bottom last year.
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: