Dedicated to Deposits: Deals, Data, and Discussion

Amboy Direct Anytime Access CD

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Amboy Direct

Amboy Direct is offering an interesting CD called the Anytime Access CD. It’s a 3-year CD with a unique feature. Each year the customer is allowed to make a withdrawal totaling 25% of your original balance with no penalty. The withdrawal can take place any time during the year. It has a rate of 1.15%. Minimum deposit is $10,000, and the maximum deposit is $100,000. This rate is listed in this Amboy Direct page as of 2/6/2014.

Update: I just learned from an Amboy Direct manager that the Anytime Access CD is available just in New Jersey.

Amboy Direct describes how the Anytime Access CD can be opened and managed in the Anytime Access CD details page. The following is from the "how it works" section:

  • Open an eSavings account for initial CD funding and future withdrawals
  • Fund Anytime Access CD with initial transfer to eSavings account
  • Transfer money from CD to eSavings with a call or online request

If you want to withdraw more than 25% of the original balance, you’ll have to pay a substantial penalty. The early withdrawal penalty is 2.00% of original principal balance and could result in partial loss of principal. That’s a large penalty when you consider the interest rate is only 1.15%. That’s almost two years of interest.

Bank Overview

Amboy Direct is a division of Amboy Bank, a New Jersey based bank founded in 1888. I first reported on Amboy Direct back in 2006 when it was offering competitive internet savings and money market accounts. The rates of those accounts have fallen, and the accounts are no longer that competitive.

Amboy Bank isn't in the best financial shape. It has an overall health grade at DepositAccounts.com of a C+ with a Texas ratio of 53.93% (below average) based on September 2013 data. Please refer to our financial overview of Amboy Bank for more details. The bank has been a FDIC member since 1934 (FDIC Certificate # 6423).

How This CD Compares

If you don’t consider the early withdrawal features of this Anytime Access CD, it wouldn’t be close to a good deal with a 1.15% APY. The highest rate for a nationally available 3-year CD (that doesn’t have checking requirements) is 1.61% APY. This is available at Melrose Credit Union.

The important question for this Anytime Access CD is how much is this early withdrawal feature worth. If the early withdrawal feature didn’t have any restrictions (like Ally’s No Penalty CD), the 1.15% rate could be considered a good deal since the rate is higher than what you can get from internet savings accounts. Unlike internet savings accounts, you won’t have to worry about this Anytime Access CD rate falling (at least for 3 years). However, the penalty-free early withdrawal feature has limitations.

If rates go up and you want to move your money into a new account that pays higher interest rates, the 25% withdrawal limitation will be a significant issue. Thus, in my opinion, the 1.15% rate isn’t high enough. Barclays 5-year CD is a better deal. It has a 2.15% APY with an early withdrawal penalty of 180 days of interest. After 13 months, the effective interest rate will be over 1.15% if the CD is closed early and the penalty is included. You can see the post-penalty yields of Barclays CD and other CDs in our Early Withdrawal Penalty Calculator.


  Tags: Amboy Direct, CD rates

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Comments
Comment #1 by gregk posted on
gregk
I earn an identical 1.15% APY on my Connexus CU 100% liquid money market account.  Yes, there's a minimum balance requirement for that rate ($100,000) , and one needs to maintain an active checking account also, - but painlessly meeting those conditions as I do makes Amboy Direct's offer of no interest in my case. 

The larger point would be (as Ken suggests) that these "exceptional feature" CD's that some financial institutions market (you might even call them gimmicks) typically don't adequately compensate for the teeny-tiny and uncompetitive rates they're often associated with.  If they'd match the best in that regard, then the additional flexibilities might be an attraction to make them stand out and be worth considering.  But sacrificing so much yield for the sake of something you're unlikely to ever exploit (and won't leave you ahead of the alternatives if you do) is always a bad idea if you think for a minute.

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