Last Chance for 2 Percent CDs? What I Found at 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For cds with terms of 12 months or longer, the penalty is an amount equal to $25 plus 3% of the amount withdrawn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.
Banks Mentioned in this Post:
|Bank of America|
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