Dedicated to Deposits: Deals, Data, and Discussion

Higher 2-Year CD Rate at Salem Five Direct


Salem Five Direct

Salem Five Direct has recently increased the rate of its 2-year CD special (what it calls eCD) to a competitive level. It has a 1.25% 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 4/23/2014.

Salem Five Direct continues to offer two other competitive eCDs. These are a 1.00% APY 1-year CD and a 2.00% APY 5-year CD. I reviewed them in 2013.

Salem Five Direct2.00%$10k-60 Month eCD Special
Salem Five Direct1.25%$10k-24 Month eCD Special
Salem Five Direct1.00%-$500keOne Savings - New Customers Only
Salem Five Direct1.00%$10k-12 Month eCD Special
Accounts mentioned in this post. Rates as of August 20, 2014

Salem Five Direct also 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 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.

For the eCDs, 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 If you withdraw principal before the maturity date, a penalty equal to 4% of the principal balance withdrawn will be charged to your account.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.

I have more information about opening eCDs in this 2013 blog post.

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 grade at of an A with a Texas Ratio of 9.36% (excellent) based on December 2013 data. Please refer to our financial overview of Salem Five Bank for more details.

How This CD Rate Compares

The highest 2-year CD rate that’s nationally available is 1.41% APY at Melrose Credit Union.

Two internet banks are offering a 2-year CD rate of 1.20%. These are noteworthy since they have special features. CIT Bank’s 2-year Achiever CD allows for a one-time add-on deposit and a one-time option to increase the CD rate if rates rise. The other internet bank with a special 2-year CD is Bank5 Connect. The CD is called the 24-month Investment CD, and it allows additional deposits of any amount at anytime during the term of the CD.

Another alternative to the Salem Five Direct 2-year CD is a 5-year CD with a mild early withdrawal penalty. Barclays currently has the best 5-year CD for early closures. Its 5-year CD has a 2.25% APY and an early withdrawal penalty of 6 months of interest. If the CD is closed early after 2 years, the effective yield after the penalty is 1.69%. You can see more effective yields at other times before maturity in our Early Withdrawal Penalty Calculator.

The above rates are accurate as of 4/23/2014.

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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