Dedicated to Deposits: Deals, Data, and Discussion

Competitive 70-Month Promotional CD at Regions Bank

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Regions Bank

Every now and then a large bank offers a decent rate on a promotional CD. The latest large bank to offer this type of deal is Regions Bank. It’s advertising two promotional CDs. The best one is a 70-month CD with a 2.00% APY. The other one is a 40-month CD with a 1.10% APY. Only the 40-month iCD is also available in an IRA. Minimum deposit is $10,000, and the maximum is $1 million. A checking account is required, and it must remain open during the entire term of the CD. These CDs are listed in this Regions promotional page as of 7/7/2014.

DETAILSINSTITUTIONAPYMINMAXPRODUCT
Regions Bank2.00%$500-70 - 71 Month Relationship CD - Promotional
Accounts mentioned in this post. Rates as of July 22, 2014

I found a few of the CD details at this Regions CD page. One detail not mentioned is the early withdrawal penalty. The only thing the small print says is "Substantial penalty may apply for early withdrawal. See account disclosure for details." I used Regions online chat service, and I was referred to their CD specialists who are available at 1-866-231-0152. I called this number, and I was told the early withdrawal penalty of this 70-month CD is equal to 6 months of simple interest. That’s a very reasonable penalty for a CD that has a term of almost 6 years. I would feel better if I could confirm this in a CD disclosure. If you are able to confirm this penalty or have been told something else, please leave a comment.

Checking Account Required

The checking account requirement is common for these promotional CDs. You’ll have to watch out for monthly fees. All of the checking accounts have potential monthly fees unless you qualify to have the fees waived. One of the checking accounts is the LifeGreen Checking, and one way to avoid an $8 monthly fee is by maintaining a $1,500 minimum average monthly statement balance.

If you do open this CD along with one of these checking accounts, make sure you monitor the checking account. It’s possible that Regions will change what’s required to avoid a monthly fee. That happened in 2011 with the Regions Preferred Plus checking account. DA member Cumulus warned us about this in the DA forum.

Branch Visit Required

According to the customer service representative, to open these promotional CDs, you must visit one of Regions’ branches.

Regions Bank branches are located in Alabama, Arkansas, Florida, Georgia, Illinois, Indiana, Iowa, Kentucky, Louisiana, Mississippi, North Carolina, South Carolina, Tennessee and Texas.

Bank Overview

Regions is a large regional bank with over $117 billion in assets. The bank has an overall health grade at DepositAccounts.com of a B+ with a Texas ratio of 8.57% (excellent) based on March 2014 data. Please refer to our financial overview of Regions Bank for more details. The bank has been a FDIC member since 1934 (FDIC Certificate # 12368).

How This Compares

If you don’t mind banking online, several internet banks are offering 5-year CDs with higher rates. The best is currently 2.30% APY at CIT Bank, Synchrony Bank and EverBank.

If you prefer to bank at a brick-and-mortar bank, BBVA Compass is another large regional bank that’s offering a 2% CD. Its promotional CD has a 5-year term, and you can get an extra 10 basis points with the necessary checking relationship. These rates are accurate as of 7/7/2014.

  Tags: Alabama, Arkansas, Florida, Georgia, Illinois, Indiana, Iowa, Kentucky, Louisiana, Mississippi, North Carolina, South Carolina, Tennessee, Texas, checking account, CD rates, Regions Bank

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Comments
4 comments.
Comment #1 by gregk posted on
gregk
A 70 month CD at the current inflation rate may be competitive, - but "decent"?  It's indecent, and even insulting, low EWP notwithstanding.  I'd feel humiliated to invest in the thing. 

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Comment #2 by QED posted on
QED
No disagreement.  But you must bear this in mind:

In 2014 it's not about beating inflation, or even simply remaining even with inflation, through use of CDs.   Instead, it's about minimizing the damage of inflation.  Inflation is merely another expense, another tax if you will.  You cannot beat it, you must pay up.  But it's important to account for inflation, for the inflation tax, in your financial planning.  Otherwise you could go broke.

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Comment #3 by Anonymous posted on
Anonymous
And, the logic of the bank for this?  And, with only 6mo EWP...  Could the bank think that its customer base believe rates are going down?

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Comment #4 by Anonymous posted on
Anonymous
It is a sad sad sad day when 2% is considered a decent rate. I will not only pass but will say that it is a terrible rate. 2% for 70 months... REALLY?? If people would stop giving their money away to these crooked banks maybe they would lift rates. The public has been brainwashed to think these crazy low rates are good. God help us.

5
Comment #5 by Anonymous posted on
Anonymous
Even worse.  When you turn 70-1/2, you have to take out 3.7% RMD on your IRA.   So the measly 2% that you earn on your IRA CD is not enough to pay for the RMD. 

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Comment #6 by paoli2 posted on
paoli2
How much one takes out depends upon how large their IRA is.  The more you have, the more you have to withdraw.  We have never had to use the percentage you show.  Where are you getting this from?  You also don't have to spend it all and can use it to earn more interest so your theory is not always what has to happen.

2
Comment #8 by Anonymous posted on
Anonymous
The distribution period for age 70 RMD is 27.4 or approximately 3.7% (Pub 590).  However, I look at how much I can take our for/on a joint return (with all other gross inc.) and stay within the 15% bracket...That bracket is hard to believe will be there for long and, thus, I  prefer to have after tax money in this environment/economy and keep 85%.  Thus, as I recall, a senior couple can gross around $80K and still be in the 15% bracket.

5
Comment #9 by paoli2 posted on
paoli2
Yes, you start off at 27.4 but it changes every year so the 3.7% would have to change to.  But I can see what you mean now.  Thanks for the explanation.

1
Comment #14 by Anonymous posted on
Anonymous
Explanation:

When you turn 70-1/2, your divisor for that age for the amount that must be withdrawn from your Traditional IRA is 27.4 or calculated as a percentage would be (1 divided by 27.4 X 100 = 3.64964%)  One other note, each year thereafter the divisor number steps up a notch.  As a result, a larger percentage has to be taken each incremental year. .

Example: Suppose the value of your traditional IRA at the end of the previous year was $100K. 

Then your RMD would be $100K divided by 27.4 or you can calculate it using 3.64964% of $100K. 

The calculated RMD is $3,649.64. 

1
Comment #15 by Anonymous posted on
Anonymous
Correction to above #14 comment:  Each year thereafter, your divisor number steps down (not up).  As a result, a larger percentage has to be taken each incremental year.

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Comment #11 by QED posted on
QED
I'm pretty sure that's not true if your IRA is a Roth IRA.  With Roth IRAs there is no RMD . . . AFAIK.

1
Comment #7 by paoli2 posted on
paoli2
It all depends upon on how much money the 2% is for.  2% of $1,000 is a paltry $20 yr.  but 2% of $150,000 can get you $3,000.00 approximately.  Should we just sit on it and just disregard the larger amounts?  I'd rather have a few thousand dollars than nothing.  No one I know thinks these low rates are good.  They stink but until we get better smelling soap, they have to do.  Better than no soap at all.

3
Comment #13 by Anonymous posted on
Anonymous
Following your logic then you should  go for current cd rates that pays 3.3% (1.3% more will get you $1950 more in interest per year on $150K). 

1
Comment #10 by Anonymous posted on
Anonymous
No bank's paid interest will ever be higher than the inflation, so the savers always lose purchasing power and after the taxes, we are lucky if we can break even.

4
Comment #12 by gregk posted on
gregk
 Another quite daffy and extreme statement from you (what would the forum be without them?), - but I understand one meant to express your rage and frustration rather than be accurate (at least outside the statistical factory in your own head).  It's true deposit accounts are a typically low yielding investment vehicle (though one some of us prefer for our own oft stated reasons) which after inflation and taxes frequently result in paltry real returns, - and during some times like now probably none, as you say.  But I can recall  many occasions over the last two decades when my take from them was quite satisfactory even if not lucrative.  During much of the financial crisis some of us had 6.25% PenFed CD's that seemed like a boon under the circumstances of that period, and not so many years before that I held 7.8% PenFed Certificates that yielded 5% over the inflation rate.  In times of rollicking economic growth when there's a high demand for money combined with increasing monetary tightening by the Fed CD rates can rise very substantially and provide good (and real) income to investors.  Those days may never return, or not for a long time to come, but for you to state they "never" have occurred or can occur is just plain inaccurate.

2
Comment #16 by Anonymous posted on
Anonymous
#12, you are lying to yourself to make it look like official statement of your knowledge.
No bank will ever pay you more interest then the official inflation rate, it is against the bank regulations. Special time limited promos are allowed to capitalize the bank by FDIC and that is all the banks can do.

3
Comment #17 by Anonymous posted on
Anonymous
Can you refute the examples provided by 12...or all hot air?

1
Comment #18 by Anonymous posted on
Anonymous
Sorry but you're wrong.

1
Comment #20 by Anonymous posted on
Anonymous
Why is that the fdic "the" benchmark...seems to those that use DA one would use DA's higher rates...I assume you would to. 

 My "issue" is inflation...after all these years I'm of the notion that generally the national inflation rates are seemingly accurate for most but it gets down to an individual as to what the "true" inflation impact is.  For example, as a senior, I travel much less by car, no debt, in a mild climate that limits amount of utilities needed, pick my expenditures etc. and except for a few grocery items the inflation rate "for me" is low.  However the DA CD rates are for everyone and while it would be nicer to have higher rates, (and at the risk of getting tossed out of the DA room!) are fine since I do not need those funds. 

1
Comment #21 by Anonymous posted on
Anonymous
Inflation is always personal, something the Feds cannot accurately reflect in their macro numbers. If one has annual after-tax expenses of $72,000 (including a $1000/month mortgage) and they make the last mortgage payment their annual expenses immediately drop to $60,000. That's more than 16% DEFLATION, something smart individuals understand. To combat inflation you can earn more, spend less or depart the system altogether.

1
Comment #22 by Anonymous posted on
Anonymous
Wow, so many self proclaimed expert on inflation here. But the bottom line is what the FED says is that counts and yes, the banks never pay more interest on the savings than the official inflation rate. There are few exceptions and specials now and then, but in general, interest paid on savings are always bellow the inflation for that period.

1
Comment #23 by Anonymous posted on
Anonymous
There are CD's paying 3.3%. Reported inflation is at 2.1% as of May, 2014. 

1
Comment #24 by gregk posted on
gregk
It might be what #22 means in this case is that the aggregate yield over the CD term won't exceed the aggregate inflation rate during the period.  However wrong he is in trying to insist that is always true, for a 5 year 3.3% Certificate today even a negative return (in real terms) isn't so unlikely.

1