Dedicated to Deposits: Deals, Data, and Discussion

Higher 30-Month CD Special Rate at Salem Five Direct


Salem Five Direct

Salem Five Direct increased the rate of its 30-month CD special by 25 basis points to 1.50% APY. Its 18-month CD special continues to have a 1.15% APY. These rates are listed in the Salem Five Direct eCD page as of 10/17/2012.

Salem Five Direct continues to offer a savings account special with a 1.00% APY. However, this is only for new customers. Existing customers get a lower rate of 0.75% which isn't mentioned on the website. I have more details in my Salem Five Direct savings account review.

Minimum deposit of the eCD is $10,000. These specials are only available for funds not currently on deposit at Salem Five. In August I asked the bank CSR for some more details of these eCDs. Below are excerpts of the replies that I received:

Here is what I was told for opening and closing the eCD:

The eCD and eOne Savings account would need to funded online from another bank. You would include the routing number and account number on the application. We send a maturity notice for CD's 40 days prior to the maturity date. You may send a request in writing to close the CD, or if you have online banking with Salem Five you may send the message securely through the Contact Us link.

We can either mail a check or you may complete a wire form and mail it with the letter to close the account. Outgoing domestic wire transfers are 20.00.

In a previous Salem Five Direct post, a reader helped me find the early withdrawal penalty details. Here is what is stated in the CD disclosure for terms one year or greater:

Early Withdrawal Penalty: When you open a Term Deposit Account, you agree to keep your funds on deposit until the maturity date. You may make withdrawals of principal from your account before maturity only if we agree at the time you request the withdrawal. If you withdraw principal before the maturity date, a penalty equal to 4% of the principal balance withdrawn will be charged to your account.

If the amount of the penalty exceeds the amount of earned interest that has not already been paid to you, we may have to deduct some of the penalty from your principal.

Note, that 4% of principal is a very large penalty for an 18-month or 30-month CD.

Bank Overview

I first reported on Salem Five Direct back in 2007 when it was offering the eOne checking account with a 5.30% APY. The eOne Savings account was launched in 2009.

Salem Five Direct is an online division of Salem Five Cents Savings Bank, which is based in Massachusetts. As a Massachusetts bank, it's a member of the Massachusetts Depositors Insurance Fund (DIF) which covers deposits that exceed the FDIC limits. One thing to note about DIF is that it's a private insurance fund. So there's no government guarantee. You can read the details at the DIF website.

Deposits up to the FDIC limits are guaranteed just like they are at every other FDIC member bank. Salem Five has been a FDIC member since 1981 (FDIC Certificate # 23296).

Salem Five has an overall health score at of 4 stars (out of 5) with a Texas Ratio of 13.07% (above average) based on June 2012 data. Please refer to our financial overview of Salem Five Bank for more details.

How This CD Rate Compares

This special 1.50% APY 30-month CD rate is hard to compare since few banks offer 30-month CDs. If it's compared to 3-year CDs, it's still very competitive. The highest nationally available 3-year bank CD APY is 1.44% at CIT Bank. The highest 3-year CD APY that's available from an all-access credit union is 1.61% ($200K minimum) and 1.51% ($100K minimum) at Sandia Laboratory Credit Union. These rates are accurate as of 10/17/2012.

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

  Tags: Salem Five Direct, savings account, checking account

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Comment #1 by Anonymous posted on
Salem Direct has a penality of 4%, which is lot, please be aware of this.

Comment #2 by rifslaw (anonymous) posted on
I would say that a 4% penalty isn't simply "a lot", but should preclude virtually anyone from seriously considering this product. If the interest rate offered was significantly and materially higher than market (it is not), and you were certain you would not need access to the funds under virtually any circumstance, then you might consider this CD. Otherwise, forget it.