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Last Chance for 2 Percent CDs? What I Found at Bank of America

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Bank of America

With the 10-year Treasury yield falling below 1.40%, it's likely that we'll see fewer CDs with yields over 2.00%. Currently, there is one large bank that still has a 2% CD. It's Bank of America. As of 7/25/2012, Bank of America's top CD rate is 2.10% APY. This is listed at Bank of America's MyExpression Banking page for Defenders of Wildlife. This may require opening the CD online. It may not be available at a branch. The MyExpression Banking CD rates are 10 basis points higher than the regular CD rates listed in BofA's standard CD rates page. Also note that these rates can vary by state. I verified the 2.10% APY for Texas and California.

There are several downsides to Bank of America's 2% CDs:

The biggest downside is a 10-year term.

The other downsides are the restrictions and penalties that Bank of America specifies in its disclosure. First, Bank of America reserves the right to refuse an early withdrawal request. Bank of America states in its disclosure:

At our discretion, we may allow you to withdraw all or part of your funds at times other than the grace period.

If they do allow an early withdrawal, it will be costly. Here is how the penalty is described in the disclosure:

For cds with terms of 12 months or longer, the penalty is an amount equal to $25 plus 3% of the amount withdrawn

For a CD with a 2.10% APY, a 3% penalty is equal to about 17 months of interest. That's a large early withdrawal penalty. However, the penalty is much worse for shorter terms. For example, a 12-month CD with a 0.67% APY, a 3% penalty would equal all of the interest that can be earned plus an additional 2.33% of the principal. For the 10-year term, it's not terrible compared to 7-year and 10-year CDs at other banks and credit unions. For example, Discover Bank's 10-year CD has an EWP of 9 months of interest. PenFed's 7-year CD has an EWP of up to 12 months of interest.

How This CD Rate Compares

Chase Bank also offers a 10-year CD, but its rate is under 2.00%. It can vary by state, but for the states that I checked, Chase has a special 10-year CD with a 1.75% APY. This requires a Chase checking account.

The only other large bank that I know of with a 2% CD is BBVA Compass which continues to offer a special 5-year CD with a 2.00% APY. However, this is not nationally available. It's only available in states where they have branches (see my review).

You can get higher rates at some internet banks and all-access credit unions. DiscoverBank continues to offer a 2.25% APY 10-year CD and a 2.00% APY 7-year CD. Patelco Credit Union continues to offer a 2.50% APY 7-year CD and PenFed continues to offer a 2.40% APY 7-year CD. Note, credit union rates may fall in August (Rates at credit unions often change at the start of each month.)

The above rates are accurate as of 7/25/2012.

Searching for the Best CD Rates

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.

  Tags: Bank of America, CD rates

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Comments
11 comments.
Comment #1 by Anonymous posted on
Anonymous
Thanks, BOA, but no thanks.

4
Comment #2 by Anonymous posted on
Anonymous
I have no problem with it, I'm laddering my CDs and can use a 10 year term for over 2% interest.

Government running deficits will be with us for long time to come.

2% and over will be bonus interest if you follow the current badget accounts of our nation.

Bernenke will keep the rates low for a decade or more.

6
Comment #3 by Anonymous posted on
Anonymous
Bernanke will keep interest rates low for many years.  He has no idea how to undo the mess he's created.  If he were to raise rates it would cause mass panic in both the bond and stock market.  In the mean time, pension funds become more underfunded and default, savers draw on their hard earned savings just to get by.  And the list goes on.

6
Comment #4 by CuriousDave (anonymous) posted on
CuriousDave
Bernanke did not cause the mess - it began long before he came aboad. And he had no choice but to force down interest rates. Imagine what the interest on the Public Debt would be if he had allowed the marketplace to function without intervention. By forcing down rates to rock-bottom levels, the banking system, much as we may all hate it, has been at least temporarily saved from total collapse. We the savers are the collateral damage and are earning virtually nothing to keep the banking system afloat, and we'll probably stay that way for a long time. For those of us who are retired it's particularly troubling since we can never make up the deficit in earnings and will need to dip deeply into investment principal. Of course, we could choose to participate in the casinos of the stock. commodity or real estate markets....good luck to us all on that.

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Comment #5 by Anonymous posted on
Anonymous
Blame whoever you want.  The crisis happened under his watch.  Is he not intelligent enough to foresee the inevitable?  Bernanke is manipulating the markets.  If you or I was to manipulate any market we would be subject to prosecution.  Stop the intervention and let the chips fall where they may.

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Comment #6 by Anonymous posted on
Anonymous
Seems like a lot of folks ae blaiming Bernake, and I totally agree that he is 'largely' responsible for the low rate mess that we are in. BUT, when inflation comes our way, and it is entirely possible that it will, he will have used all his bullets and there will be no other viable alternatives, other to raise rates substantially. I don't know any more than the rest of you, but, surely, hyper inflation is a possibility?  The interest on the National debt would then have to be paid with inflated dollars and then.............? So no, for me, I would not feel at all comfortable with 2% for ten years and tons of EWP's. But, thats just MHO and I trust that most of you have your own?

3
Comment #7 by Kaight posted on
Kaight
To #2:

Ben Bernanke cannot keep rates low one day longer than he occupies his present office.  On February 1, 2014, God willing, Bernanke will no longer be Fed Chairman.  His current reign of terror will end on January 31, 2014 if Mr. Romney is elected in November.  But Bernanke will be reappointed by Obama if he is reelected.  So we get to decide in November how things will play out.  For this, and for so many other reasons, my decision already has been made.  With a single vote I shall help to erradicate a horrid Fed Chairman and a disastrous POTUS.  What a splendid twofer!

3
Comment #8 by Bozo posted on
Bozo
Politics aside, it's hard to ladder with a ten-year CD. Five-year CDs are readily available. Six- and seven-year CDs less so. I have yet to find any eight- or nine-year CDs. That said, I do have a 10-year CD currently running, but it's outside my ladder. Icing on the cake, as it were.

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Comment #9 by Anonymous posted on
Anonymous
To Bozo - #8,

Ten year CD is easy to ladder. Last year I bought 10 year CD, I'm going to buy BofA 10 year CD today and wait until next year for my other CD to mature and then buy another 10 year CD. No problem for me.

2
Comment #10 by Anonymous posted on
Anonymous
#9  Why buy a 10 year CD next year?  The rate will be 0% interest by then. 

5
Comment #11 by Bozo posted on
Bozo
Anon #9, perhaps I should have phrased it better. I should have said "hard to ladder effectively". Point being, rate competition is better with five-year CDs, simply because just about every bank and CU offer them.* Rate competition is less with six- and seven-year CDs, simply because fewer institutions offer them. And rate competition in ten-year CDs, well, less still. But you are absolutely correct, it is possible to create a ten-year ladder.

*Anecdotally, it does appear that the best deals (relatively speaking, of course) tend to gravitate to the 5-yr product, which, for many (if not most) institutions is the longest CD on offer.

3
Comment #12 by Bernacke did it (anonymous) posted on
Bernacke did it
I am amazed that the LIBOR rate fixers at Barklays are being investigated for crimminal wrongdoings while the Bernacke Rate fixer is not!  Certainly, he is fixing the rate way lower than the market would!

5