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Update 11/19/2011: The 5-year CD rate has fallen to 1.75% APY. is offering another special gift package for opening a CD. This one has a holiday theme. The rate and package details are currently listed at front page. It's scheduled to end on 11:59 PM EST on 11/28/2011. The gift package requires opening a 2.00% APY 5-year CD with a minimum deposit of $25,000. Below are the gifts that are included in this package along with my estimates of the values based on what I found today at Amazon:

The total estimated value of these four gifts is $1,287.83. Please note that I had to guess about the model versions so these prices should be considered to be just estimates.

The main downside with receiving gifts in place of a higher interest rate is that the bank will determine the value of the gifts and use that value when they send the 1099-INT. That value is likely to be higher than what you could get if you did your own shopping. The higher value reported on the 1099-INT will cost you in taxes.

I called this morning about the total value GiftsforBanking will report. I was told they were checking with their gift supplier Incentive Logic, and they said they would call me back. I'll update this post when they tell me the value. If you call and receive a value, please leave a comment. Update 4:49pm: I did not receive a call back, so I called again this afternoon. This time the CSR did claim to know the value. The CSR reported the total value that would be reported is $1,600.

You can get a yield that's 0.25% higher on a 5-year CD at (GiftsforBanking's sister internet bank). At an all-access credit union, you can get a yield that's 0.83% higher on a 5-year CD at Velocity Credit Union. So how much will the lower interest rate cost you over the 5 years for a $25K deposit? Here are estimates:

  • $312.50 less interest over 5 years vs. a 2.25% CD
  • $1,037.50 less interest over 5 years vs. a 2.83% CD

Another downside to the CDs is the early withdrawal penalty. The penalty for terms over one year equals the value of the gift (including shipping and sales taxes) plus six months of interest of the amount withdrawn. Refer to the disclosure for more details. The gift value adds quite a bit to the early withdrawal penalty.

When I called today, 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 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 reviews section. is part of 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 is 4 stars (out of 5) with a Texas Ratio of 25.21% (average) based on June 2011 data. It has been a FDIC member since 1943 (FDIC Certificate # 16049).

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Comment #1 by Anonymous posted on
I spoke to a CSR and this is what I got from them, that the value proposition of is a competitive interest rate with the benefit of a valuable gift. The value of the gift as reported on the 1099-INT is for the fair market value of the selected gift(s), which includes the reasonable cost of shipping and handling.  Each gift-folio value is set and agreed upon between the bank and the vendor.    This is the amount reported on the 1099-INT, which follows IRS regulations.  And, this amount is disclosed at time of gift selection.

Comment #2 by Anonymous posted on
The value of the gift, is NOT the fair market value, but more likely the manufacturer suggested retail value...which is higher than what you would be paying for the same item at Amazon, or Target...but if the CST said "fair market," I guess fair market in his world means full retail value...

Comment #3 by Anonymous posted on
Their interest rates just dropped this morning.  The 5 yr is at 1.75% now.