Bank5 Connect Pushes 6-Month CD Rate Upward
For the fourth time in the last five months, Bank5 Connect (internet division of Massachusetts-based BankFive) has raised the rate on its 6-month CD. Following last week’s 20-bps rate increase, the 6-month CD currently earns 5.50% APY. The minimum opening deposit is $500, with a $500k maximum opening deposit. According to the online application, “we limit total relationships to $1 million in deposits.”
In the past ten months, 6-month CD APY has added a total of 515 bps in a series of seven rate increases. In less than a year, the 6-month CD APY has gone from the depths of rate obscurity to a near rate-leader status.
As stated in the Truth-in-Savings (TIS) disclosure, the Early Withdrawal Penalty reads as follows:
The penalty will equal three months interest on the amount withdrawn subject to penalty.
Principal withdrawn before maturity is included in the amount subject to early withdrawal penalty.
N.B. – There is new language in the TIS that is not in the account owner’s favor.
Withdrawal limitations: You may make withdrawals of principal from your account before maturity only if we agree at the time you request the withdrawal.
Depositors’ Insurance Fund
In addition to the standard FDIC insurance, Bank5 Connect offers Depositors’ Insurance Fund (DIF) to all its depositors. Established in 1934 by the Massachusetts legislature, DIF was an alternative to FDIC because (by state law) Massachusetts savings banks were not allowed to join FDIC. In 1956, the law was changed, allowing Massachusetts savings banks to join FDIC. For those that did join FDIC, the DIF became an excess deposit insurer, insuring deposits in excess of FDIC limit. By 1986, all DIF member banks had joined FDIC, effectively making DIF an excess deposit insurer exclusively.
According to the Deposit Insurance page, Bank5 Connect is “one of the only online banks offering DIF protection.”
- 100% Deposit Insurance – The DIF insures all deposits above the FDIC limit for Massachusetts savings banks. Based in Massachusetts, Bank5 Connect is a DIF member bank, and all our deposit accounts are covered by DIF insurance.
- No Residency Requirements – No matter where you live, your Bank5 Connect accounts are covered by DIF.
- All Deposits, No Limits – Whether you have a Bank5 Connect certificate of deposit, savings account or checking account, your deposits are insured 100% regardless of your balance.
- It's Automatic and Free – There are no forms or applications required. You automatically receive DIF coverage at no cost upon opening a Bank5 Connect account and making a deposit.
- Protection You Can Trust – No depositor has ever lost a penny in a DIF member bank, going back more than 80 years.
Availability
Massachusetts-based BankFive launched its internet division, Bank5 Connect, approximately ten years ago. Bank5 Connect offers its product line to all U.S. citizens/resident aliens (18 years or older) who have a valid Social Security number, with the exception of those who live in Massachusetts or Rhode Island.
Bank5 Connect's online application re-directs residents of Massachusetts and Rhode Island to BankFive's online application.
Unfortunately, we are not able to offer Bank5 Connect services to residents of Massachusetts or Rhode Island. But we’d love to have you as a customer of BankFive,
our community bank based in Massachusetts that’s been serving customers since 1855.
While BankFive offers comparable products, the rates are significantly lower, e.g., BankFive’s 7-month CD currently earns 3.00% APY.
Account Opening
As an internet bank, Bank5 Connect has no brick-and-mortar branches. Opening any type of account, including the 6-month CD, must be done online.
Funding and Other Details
The following information is from the Bank5 Connect website and a conversation with CSR.
- Funding – ACH.
- Ownership – Individual, joint, or trust.
- Interest – Compounded/credited monthly; credited interest can be withdrawn penalty-free anytime during the term.
- Maturing Funds – Cashier’s check or internal transfer. ”When your CD reaches maturity, simply contact us at (855) 552-2655, or log into Online Banking and send us a Secure Mail to let us know what you’d like to do with the funds.”
- Grace Period – 10 calendar days before automatic renewal.
- Beneficiaries – Unlimited, with equal shares. Social Security numbers are required.
- Credit Check – ChexSystems when opening a new account.
Bank Overview
As an online division of BankFive, Bank5 Connect operates under BankFive’s FDIC Certificate and shares its financial history.
Bank5 Connect/BankFive has an overall health grade of "B+" at DepositAccounts.com, with a Texas Ratio of 1.22% (excellent), based on March 31, 2023 data. In the past year, the Bank has increased its total non-brokered deposits by $23.97 million, an above average annual growth rate of 2%. Please refer to our financial overview of Bank5 Connect/BankFive (FDIC Certificate # 23286) for more details.
BankFive was founded in 1855 as the Fall River Five Cents Savings Bank, one of the first Five Cent Savings Banks in America. The “Five Cent” moniker was chosen because these banks required only a 5¢ deposit to open an account. BankFive is currently the 31st largest bank headquartered in Massachusetts, with deposits in excess of $1.7 billion and more than 148,000 customer accounts.
How the 6-Month CD Compares
When compared to similar length-of-term CDs tracked by DepositAccounts.com which are nationally available and have minimum deposit requirements of $10k or less, two credit unions have higher rates than currently offered on the Bank5 Connect 6-Month CD. The following table compares the 6-Month CD to the two highest-rate CDs from credit unions and the two highest-rate CDs from other banks.
The above information and rates are accurate as of 9/5/2023.
To look for the best CD rates, both nationwide and state specific, please refer to our CD Rates Table page.
