Why A $500 CD Bonus Isn't As Good As It Sounds

It might seem that a $500 bonus for opening a CD is a good deal. However, the devil is in the details. Here's the deal. Unity Bank is offering a $500 Visa Gift Card bonus for opening a 1-year CD with a $100,000 minimum balance and an active checking account. Here's the link to Unity Bank's promotion page.

Without considering the active checking account, an extra $500 for a $100,000 balance is like adding 0.50% to the rate of a 1-year CD. According to Unity Bank's rate sheet, the 1-year CD has a 0.40% APY. So if you add these together, the total return for the CD is only 0.90%. There are many internet banks offering higher 1-year CD rates with no active checking requirement.

This reminds me a little of the CDs at GiftsforBanking.com. Those CDs were sometimes good deals when the CD rates were competitive. The added gift could make it very competitive. But now the gifts can't make up for the very low CD rates.

You have a good memory. That did get a lot of publicity for the bank. I wonder if the bank had any customers for that CD.