Salem Five Direct has increased its rates and added new terms on its special eCDs. The new rates are high compared to what other banks are offering. Just be aware that Salem Five has a severe early withdrawal penalty of 4% of principal. Below are the new eCD rates as listed in the Salem Five Direct eCD page as of 5/22/2013.
- 1.50% APY 3-year eCD
- 1.25% APY 2-year eCD
- 1.00% APY 1-year eCD
Salem Five Direct continues to offer a savings account special with a 0.90% APY. However, this is only for new customers. Existing customers get a lower rate which isn't mentioned on the website. I have more details in my Salem Five Direct savings account review.
Salem Five Direct eCDs and savings accounts are available nationwide. Minimum deposit of the eCD is $10,000. As I mentioned above, there’s a severe early withdrawal penalty of 4% of principal. 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 If you withdraw principal before the maturity date, a penalty equal to 4% of the principal balance withdrawn will be charged to your account.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.
In August 2012 I asked the bank CSR for some more details of these eCDs. Below are excerpts of the replies that I received regarding 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.
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 DepositAccounts.com of 4 stars (out of 5) with a Texas Ratio of 11.92% (above average) based on December 2012 data. Please refer to our financial overview of Salem Five Bank for more details.
How This CD Rate Compares
The 2-year and 3-year eCDs are both very competitive compared to what other banks and credit unions are offering. Other than Salem Five, the best 2-year CD rate is 1.30% APY at Connexus Credit Union. However, this requires an active checking account. Without a checking account requirement, the best deal is the 1.20% APY 2-year Achiever CD at CIT Bank.
The best 3-year CD rate is 1.75% APY at Connexus Credit Union (with an active checking account). Without the checking requirement, the best rate is 1.51% APY at State Bank of India - Chicago. This has a $90K minimum deposit, and it can only be opened at a branch or by mail.
The 1-year eCD rate isn’t the best, but it is still competitive. The best 1-year CD deal is the 1.05% APY 1-year Achiever CD at CIT Bank.
These rates are accurate as of 5/22/2013.
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.