GiftsforBanking.com is offering another special gift package for opening a CD. This one has a back-to-school theme. The rate and package details are currently listed at GiftsforBanking.com front page. It's scheduled to end on 11:59 PM EST on 8/15/2011. The gift package requires opening a 2.00% APY 5-year CD with a minimum deposit of $10,000. The gift package includes:
- iPod touch 32GB
- iLuv Vibe Plus docking alarm clock with bed shaker
- $125 Bed, Bath & Beyond Gift Card
You can get at least 0.50% more on a 5-year CD at other banks and 0.83% more on a 5-year CD at credit unions. So how much will the lower interest rate cost you over the 5 years for a $10K deposit?
- $250 less interest over 5 years vs. a 2.50% CD
- $415 less interest over 5 years vs. a 2.83% CD
According to Amazon, the Apple iPod touch 32GB (4th generation) costs $275. The docking alarm clock costs about $38.53. At Plastic Jungle, you can get $125 in Bed, Bath & Beyond gift cards for $112.50. So if you went out and bought the above gifts, it would cost you $426.03.
If you're interested in this CD special, be sure to call GiftsforBanking.com to ask about the value they will report on the 1099-INT. That's one downside to receiving gifts instead of cash for bonuses. If the bank sets the gift value too high, it will cost you in extra taxes.
Another downside to the GiftsforBanking.com CDs is the early withdrawal penalty. The penalty for terms over one year equals the value of the gift plus six months of interest of the amount withdrawn. Refer to the GiftsforBanking.com disclosure for more details. The gift value adds quite a bit to the early withdrawal penalty.
When I called GiftsforBanking.com earlier this year, I was told that the CD rate locks at the date of the application, and you have 14 days to fund the CD. Several readers have reported a slow CD opening process and poor customer service. I have more details in my previous GiftsforBanking.com CD review. Several readers shared their experiences with opening these CDs in the comments of that post. There are also more comments in this forum thread and in the GiftsforBanking.com reviews section.
GiftsforBanking.com is part of iGObanking.com which is a division of Flushing Savings Bank, FSB, a New York bank with $4.32 billion in assets and 16 branches. The bank's overall health score at DepositAccounts.com is 4 stars (out of 5) with a Texas Ratio of 29.5% (average) based on March 2011 data. It has been a FDIC member since 1943 (FDIC Certificate # 16049).
Other Long-Term CD Options
The best deal is actually at iGObanking.com which is offering a 3.50% APY 10-year CD (as of 8/4/2011). Due to a mild early withdrawal penalty of 6 months interest, this 10-year CD provides a higher rate when closed early than most short-term CDs. I described this in my iGObanking vs Ally Bank CD comparison post.