Salem Five Direct has recently added a new 5-year CD special (what it calls eCD). It has a 2.00% APY with a minimum deposit of $10,000. Maximum deposit amount is $500,000, and only personal accounts are allowed. This new eCD rate is listed in the Salem Five Direct eCD page as of 7/12/2013. Thanks to the reader who first noted this new special in the DA forum.
Salem Five Direct continues to offer three other competitive shorter-term eCDs. I reviewed them in May. As I mentioned in that May post, one downside to these CDs is a large early withdrawal penalty of 4% of principal.
Salem Five Direct also 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. 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 If you withdraw principal before the maturity date, a penalty equal to 4% of the principal balance withdrawn will be charged to your account.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.
Yesterday I spoke with a Salem Five Direct CSR via the online chat. I confirmed some of the information that I have received in past chats. 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 was also told yesterday that “the rate will lock at the time of a completed or in progress application.” When you close the CD, another option to receive the funds is to request for them to transfer the eCD funds to your eOne Savings or eOne Checking account.
I also asked about designating beneficiaries. The CSR was a little confusing in her answers. I first asked if beneficiaries can be added to an eCD. Here’s what the CSR said:
One beneficiary can be added to each account. You may complete the information on the signature form once you print and sign it and we will add the information to the account after it is opened.
I then asked if multiple eCDs can be opened with different beneficiaries for each eCD. She provided some confusing answers. I tried to clarify by asking “if only one beneficiary can be designated even if you have multiple eCDs.” The CSR said that is correct. If you have experience with designating beneficiaries to Salem Five Direct accounts, please leave a comment. I reviewed some past comments, and this May 2013 comment and this November 2012 comment provide some useful information on trust accounts and designating beneficiaries at Salem Five Direct.
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 11.48% (above average) based on March 2013 data. Please refer to our financial overview of Salem Five Bank for more details.
How This CD Rate Compares
It’s nice to see a 2% 5-year CD again that’s nationally available that doesn’t require a checking account. The next highest 5-year CD rate is 1.96% APY at Melrose Credit Union. The next highest at an internet bank is 1.75% APY at CIT Bank. These rates are accurate as of 7/12/2013.
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.