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Ken Tumin founded the Bank Deals Blog in 2005 and has been passionately covering the best deposit deals ever since. He is frequently referenced by The New York Times, The Wall Street Journal, and other publications as a top expert, but he is first and foremost a fellow deal seeker and member of the wonderful community of savers that frequents DepositAccounts.

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Bank of Internet USA0.55%$1k-12 Month CD
Accounts mentioned in this post. Rates as of July 24, 2014

Competitive 1-Year CD Rate at Bank of Internet USA - Available Nationwide


Bank of Internet USA

It's not anything to get excited about, but it's nice to see a rate increase for a change. Bank of Internet raised its 1-year CD rate from 1.21% to 1.27% APY. Minimum deposit is $1,000. This rate increase is only noteworthy because it puts Bank of Internet near the top for nationally available 1-year CD rates. The highest rate is currently 1.31% APY at Melrose Credit Union and Self-Help Credit Union. The only bank with a higher rate is MetLife Bank with a 1.30% APY, but this requires a minimum deposit of $25K. These rates are accurate as of 7/7/2011.

Even though you might be able to get a little higher rates at other institutions, Bank of Internet CDs have some features that may give this CD an edge over the slightly higher-rate CDs at other institutions. The features are described in the bank's CD page and from their disclosure page. The commendable features include:

  • Multiple beneficiaries can be included in the application
  • You can select ownership designation as POD, ITF or ATF.
  • You can select the following types of accounts in the application: Joint, Trust, Non-Profit Corp. and UTMA
  • In the application you can select to have interest added back into the CD or paid out monthly to an outside bank via ACH
  • The CD rate is determined on the day Bank of Internet receives your application. This rate is reserved for a period of 10 business days to allow time for your deposit to arrive.

Not all of the CD features commendable. These include:

  • No IRA accounts available
  • Early withdrawal penalty is 6 months of interest for terms of 12 to 23 months
  • Grace period at maturity is 10 days
  • Forfeit interest earned during grace period if you close the CD

Savings and Checking Accounts

Unfortunately, Bank of Internet's savings and checking account rates are much less competitive. Its High Yield Savings account has a rate of only 0.80% APY, and its High Interest Checking has a rate of 0.71% (as of 7/7/2011).

In the past, the main issue with Bank of Internet was the lack of an ACH bank-to-bank transfer service. They finally added this feature late last year. However, as you can see in their fee schedule, ACH outgoing transfers are not free. They charge $5 for each standard 3-day outgoing transfers and $10 for next day outgoing transfers. Incoming transfers are free.

Bank of Internet Overview

Bank of Internet just had its 11th anniversary. It's one of the oldest pure internet banks. During that time, its financials have remained strong. Currently, it has an overall health score at of 4 stars (out of 5) with a Texas Ratio of 12.25% (above average) based on March 2011 data. The bank has been a FDIC member since 2000 (FDIC Certificate # 35546).

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  Tags: CD rates, Bank of Internet USA

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Comment #1 by Mr. Frugality (anonymous) posted on
Mr. Frugality
Nice to see a rate increase, even if it's not huge, to a competitive level. Also Bank of Internet is now offering, as are several other banks with similar features, their MyDeposit service which allows remote deposit of checks via scanner/computer at no charge. Deposits received by 3 P.M. PST/6 P.M. EST are processed the same day.

Comment #2 by Anonymous posted on
We haven't done business with BofI in years but I do recall they did a hard pull for every CD we opened with them.

Comment #3 by Mr. Frugality (anonymous) posted on
Mr. Frugality
Have done numerous CD's over the years, but only Chex Systems was used for identity, never a hard pull. But, of course policies can change.