iGObanking.com has introduced two new CDs with competitive rates. The bank now offers terms of 7 years and 10 years. The rates are currently very competitive: 3.10% APY for 7 years and 3.50% APY for 10 years (as of 7/5/2011). As a comparison of how competitive these are, PenFed's 7-year CD has a 2.75% APY and Discover Bank's 10-year CD has a 3.00% APY.
My last review of iGObanking.com's CDs was in October when it was offering a top rate on 2-year CDs. Every now and then iGObanking comes out with a good CD deal, but you have to be careful when the CD matures. Many of the CD rates for certain maturities are not competitive. So if you let your CD automatically renew, you may get stuck with a low-rate CD. A current example is the 1-year CD which has a yield of only 0.25% APY.
According to customer service, the CD rate is locked in at the time of the application date. Funding of the CD can be done via an ACH transfer from your current bank or by mailing a check. Several readers have complained about the online application. One commented that "signing up is a real pain -- endless questions and unforgiving software."
Early Withdrawal Penalty
The certificate of deposit details are described in the bank's disclosure page. According to this disclosure:
If your account has an original maturity of one year or greater: The fee we may impose will equal six months simple interest on the amount withdrawn subject to penalty.
However, the disclosure does give them the right to refuse an early withdrawal of principal: (see 7/9 update below)
You may make withdrawals of principal from your account before maturity only if we agree at the time you request the withdrawal.
That stipulation is worrisome especially for long-term CDs.
Update 7/9/2011: iGObanking.com has removed the sentence from their online disclosure which states they have the right to refuse an early withdrawal of principal. After readers notified me of this change, I found the old version of the online disclosure on Google's cache. Below is an excerpt from the online disclosure that Google copied on June 30, 2011:
You may not make deposits into your account before maturity. You may make withdrawals of principal from your account before maturity only if we agree at the time you request the withdrawal. You can only withdraw interest credited to your account before maturity without penalty. You can withdraw interest anytime during the term of the certificate of deposit after it is credited to your account. IRS rules and regulations apply to all Individual Retirement Accounts.
Below is the same paragraph from new online disclosure:
You may not make deposits into your account before maturity. You can only withdraw interest credited to your account before maturity without penalty. You can withdraw interest anytime during the term of the certificate of deposit after it is credited to your account. IRS rules and regulations apply to all Individual Retirement Accounts.
Note that the sentence which contains "only if we agree" has been removed.
iGObanking.com Savings and Checking Accounts
The bank has done a fair job at keeping its savings account rates competitive, but the rates haven't been near the internet savings account rate leaders in quite a while. Its current rate is 1.01% APY on any balance.
My previous iGObanking reviews:
iGObanking.com is a division of Flushing Savings Bank, FSB, a New York bank with $4.32 billion in assets and 15 branches. The bank's overall health score at DepositAccounts.com is 4 stars (out of 5) with a Texas Ratio of 29.50% (average) based on March 2011 data. It has been a FDIC member since 1943 (FDIC Certificate # 16049).
Best CD Rates Nationwide and in Your State
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. Make sure to note the bar above the rate table. It will indicate whether you are displaying accounts available nationwide or in your state. You can change this setting by selecting the "Filter Accounts" button and adjusting the setting in the Availability section.