New Jersey Deposit Account Rates and Deals

Pentagon Federal Credit Union (PenFed) is yet another rate leader to make cuts to its CD rates. Economic data of a slowing economy and falling Treasury yields last month had pointed to a deposit rate environment that would become worse. Unfortunately, that did happen as we saw last week when several CD rate leaders including Alliant Credit Union, Melrose Credit Union, Ally Bank and Discover Bank reduced their CD rates. In this new month PenFed joins this group with its own CD rate cuts. Below are the new CD yields for September 2010. I've noted the old yields in parenthesis.

• 3.49% APY 7-year CD (was 3.75%)
• 2.75% APY 5-year CD (was 3.00%)
• 2.50% APY 4-year CD (was 2.78%)
• 2.00% APY 3-year CD (was 2.25%)
• 1.50% APY 2-year CD (was 1.75%)
• 1.26% APY 1-year CD (was 1.31%)

Minimum deposit is $1,000. The rates are also available in an IRA. These yields are listed in PenFed's Money Market Certificates page as of 9/01/2010. Even though PenFed typically maintains CD rates through the month, they no longer guarantee it.

Below is an updated early withdrawal yield table that shows approximate average yields you would receive if you close these CDs early. It allows you to determine if it makes more sense to buy a long-term CD rather than a short-term CD. I also included Ally Bank's 5-year CD which has a 2.74% APY as of 9/01/2010 with only a 60-day early withdrawal penalty.

Approximate Yields After Early Withdrawal Penalties

As you can see from the above table, if you think you're going to leave the CD untouched for at least 3 years, PenFed's 7-year CD is better than its other CD terms. Ally Bank is still the best deal if you think it's likely you'll break the CD before 4 years (either because you'll need the money or if interest rates shoot up). At year 4, PenFed's 7-year CD becomes the best deal. For more details about PenFed CDs, please refer to my PenFed CD review. For more details about Ally Bank's CDs and early withdrawal penalty, please refer to my Ally Bank CD review.

PenFed's Certificate Reservation Program

I logged into my PenFed account, and I checked the status of PenFed's certificate reservation program. I first reported on this program on August 19th. It allows select PenFed members to reserve CDs in January 2011. The best is a 5.00% APY 10-year CD. As I mentioned, I was informed that the program was only open to PenFed members who had CDs maturing in October. However, several readers who were not in the select group have commented in my post that they have been able to reserve these CDs online. I have not been able to find out if there's any chance that PenFed will not honor these reservations.

PenFed had allocated $240 million of funds for this program. As of this morning (9/01/10), there is $186.68 million left according to PenFed's Certificate Reservations page (available when you're logged in). I'm glad to see the funds are lasting. Perhaps most members are not jumping on this deal because they believe these CD terms are too long.

PenFed Membership

PenFed makes it easy for anyone to join and open accounts online. If you don't qualify based on military, employer or family, you can become eligible by joining the National Military Family Association (NMFA). Please refer to How to Join Overview Page for details. Joining NMFA and PenFed can be done at the same time all online. The yearly membership for NMFA is $20, but your membership in the association does not need to be maintained to continue as a PenFed member.

Branch Locations

Accounts can be opened online, but for those who prefer branches, PenFed has branches in several parts of the country including Washington DC, Maryland, Virginia, New Jersey, New York, Colorado, North Carolina, Hawaii, Puerto Rico, Missouri and Texas.

Financial/NCUA Info

PenFed's ratings for safety and soundness continue to be strong: 4 stars (excellent) at BauerFinancial, 4 stars (sound) at Bankrate.com and an overall health score of 4 out of 5 at DepositAccounts.com (see our financial overview of Pentagon FCU). These ratings are based on March 2010 data except for DepositAccounts.com which is based on June 2010 data. PenFed is one of the largest credit unions in the US with $14.33 billion in assets and $11.62 billion in deposits. It's federally insured by the NCUA (Charter # 227).

Searching for the Best CD Rates

To search for the best nationwide rates and the best rates in your state, please refer to the following tables at DepositAccounts.com:

• Best CD rates
• Best IRA CD rates

PNC Bank has another $100 bonus for opening a checking account. It's not as good as the $125 July bonus, but this $100 bonus appears to be the best PNC bonus currently available. Here's the direct link to the promotion. It requires direct deposit of at least $400 per month along with 10 check card purchases. According to the small print, the checking account must be opened via the online application by 9/30/2010. Here's some of the small print as listed in the promo page with my highlights of the important things to note:

Offer available only to new PNC customers. New personal checking account must be opened via online application between 8/01/2010 and 9/30/2010. To qualify for the $100 reward a Qualifying Direct Deposit must be received and at least 10 check card purchases made with your PNC Visa Check Card must be posted to the eligible account within 60 days of account opening. Your checking account must remain open in order for you to receive the $100 reward, which will be credited to the eligible account within 60 days after all conditions have been met and will be identified as "Promo Reward Cash Trans" on your monthly statement. A "Qualifying Direct Deposit" is defined as a recurring direct deposit of a paycheck, pension, social security or other regular monthly payment electronically deposited into a Free, Performance, Performance Select Checking account, or the Spend account for Virtual Wallet (each an "Eligible Account") on a recurring month-to-month basis. The amount of each recurring Direct Deposit must be at least $400. The recurring Direct Deposits must be made by an employer or an outside agency. Credit card cash advance transfers, transfers from one account to another or deposits made at a branch or ATM do not qualify as Qualifying Direct Deposits. Offer only available to new PNC Bank checking account customers who open the Eligible Account using the on-line application. Offer only available to residents of DC, DE, FL, IL, IN, KY, MD, MI, MO, NJ, OH, PA, VA and WI. Offer may be extended, modified or discontinued at any time and may vary by market. This is an online offer that is not available through the branch.

PNC Bank's Virtual Wallet

One of the checking accounts that can qualify for the bonus is the Spend Account which is part of PNC's Virtual Wallet. Another part of Virtual Wallet is the Grow Account which is a savings account that pays 1.10% APY on balances up to $25K as of 8/8/2010. Please see my PNC Virtual Wallet review for more details.

PNC Q2 Results and Its Deposit Strategy

PNC released its second quarter results in late July. It reported a better-than-expected second-quarter profit. One thing I found interesting in PNC's press release was the description of its plans to grow checking account deposits while shrinking CD deposits. Here's an excerpt:

Average deposits of $182 billion declined $.8 billion compared with the first quarter of 2010 and $10.4 billion, or 5 percent, compared with the second quarter of 2009. In both comparisons, average deposits decreased due to the continued reduction of high-cost and primarily nonrelationship certificates of deposit and other time deposits, partially offset by growth in average transaction deposits. This was consistent with PNC’s overall deposit strategy focused on growing demand and other transaction deposits as a lower-cost funding source and the cornerstone product of customer relationships.

You can see PNC executing this strategy with these checking account bonuses and its very-low CD rates (one example: 1.50% 5-year CD in Florida).

The conversion of National City branches was also mentioned in the press release:

PNC successfully completed the National City conversion of 16 million accounts, 6 million customers and 1,300 branches in nine states.

I know many readers will miss those National City CD specials that were so popular a couple of years ago.

PNC Bank has been a FDIC member since 1934 (FDIC Certificate # 6384).

Other Bank Bonuses

To find other bonus deals at other banks, please refer to my bank bonus page which has all of my recent bank bonus blog posts. Some additional bonuses are also listed in the checking account deals section of the discussion forum.

Pentagon Federal Credit Union came out with its August CD and IRA CD rates. Rates for most terms stayed the same. However, the 7-year CD rate increased from 3.51% APY to 3.75% APY which makes this one of the best nationwide CD rates. The 2-year CD rate also increased, but the new rate of 1.75% APY is still not a top rate. Minimum deposit is $1,000. These rates are listed in the PenFed's Money Market Certificates page as of 8/02/2010. PenFed typically maintains its CD rates through the month, but note that there's no guarantee.

The main downside with this 7-year CD is a hefty early withdrawal penalty. According to the CD application (disclosure on 2nd page), the early withdrawal penalty for the 7-year certificate is:

a) If redeemed within 365 days of the issue date or any renewal date, all dividends will be forfeited;
b) If redeemed thereafter, but prior to the maturity date, dividends for the most recent 365 days will be forfeited.

In short, the penalty is 1-year of interest for an early withdrawal after the first year. You lose all interest for an early withdrawal before the first year. The penalty for the shorter terms is only 180 days of interest.

Special Early Withdrawal Feature for PenFed IRA CDs

PenFed has a nice feature for its IRA CDs. If you have reached the age of 59½, you can avoid an early withdrawal penalty if you only take a partial withdrawal. A partial withdrawal just requires that you leave at least the minimum balance of $1,000 in the IRA CD. So for large IRA CDs, this effectively eliminates the early withdrawal penalty. I described the details of this feature in this PenFed IRA CD review.

Do Long-Term CDs Make Sense?

It might seem unwise to lock into a long-term CD when rates are so low. If rates do go up in the next year or two, you may be able to get much higher rates. So it may seem better to stay in a savings account or short-term CDs until rates improve. The risk is that if rates don't go up, you'll earn much less interest than what you could have earned with the long-term CD. You also have to take into account the early withdrawal penalty. If rates go up substantially, you can break the CD with the early withdrawal penalty and reinvest the money into higher paying accounts. You could make more money in this approach than you could if you kept your money in a savings account or short-term CDs.

Below is a comparison of the approximate annualized yields that would result if you closed PenFed's 7-year CD at year 1, 2 and up to year 6. The yield is approximated by removing one year of interest and then computing the new effective average yield for that time period. The yield at year 2 is easy to compute since you essentially cut the amount of interest that you earn in half. So you just divide 3.75% by 2 which is approximately 1.88% APY. As you can see, this is a pretty competitive yield for 2-year CDs.

For comparison, I included PenFed's 5-year CD and Ally Bank's 5-year CD. PenFed's 5-year CD's early withdrawal penalty is 180 days of interest (only half of the 7-year CD penalty). Ally Bank's 5-year CD has only a 60-day interest penalty. The rates are as of 8/02/2010.

Average Yields After Early Withdrawal Penalties

As you can see in the table above, you will earn more with the 5-year CDs if you take an early withdrawal before 3 years. After 3 years, the 7-year CD starts to outperform the PenFed 5-year CD, and after 4 years, the 7-year CD starts to outperform Ally's 5-year CD. Fore more details about Ally Bank's CDs and early withdrawal penalty, please refer to my Ally Bank CD review.

PenFed Membership

PenFed makes it easy for anyone to join and open accounts online. If you don't qualify based on military, employer or family, you can become eligible by joining the National Military Family Association (NMFA). Please refer to How to Join Overview Page for details. Joining NMFA and PenFed can be done at the same time all online. The yearly membership for NMFA is $20, but your membership in the association does not need to be maintained to continue as a PenFed member.

Branch Locations

Accounts can be opened online, but for those who prefer branches, PenFed has branches in several parts of the country including Washington DC, Maryland, Virginia, New Jersey, New York, Colorado, North Carolina, Hawaii, Puerto Rico, Missouri and Texas.

Financial/NCUA Info

PenFed's ratings for safety and soundness continue to be strong: 4 stars (excellent) at BauerFinancial, 4 stars (sound) at Bankrate.com and an overall health score of 4 out of 5 at DepositAccounts.com (see our financial overview of Pentagon FCU). PenFed is one of the largest credit unions in the US with $14.2 billion in assets and $11.51 billion in deposits. It's federally insured by the NCUA (Charter # 227).

PNC Bank has another checking account bonus. They are offering a little more than last month. From the home page of their website, they're listing a bonus of up to $125. Here's the direct link to the promo page. To receive the first $100 requires direct deposit of at least $400 per month along with 10 check card purchases. To receive an extra $25 requires signing up for online banking and making 5 payments through Online Bill Pay. Offer is scheduled to end on July 24, 2010. The promotion applies to both the Virtual Wallet and the Free Checking Account.

There's also a $150 bonus being advertised in the St. Louis area. This was advertised in yesterday's (7/11/10) St. Louis Post-Dispatch. The ad is available online here. The requirements for this $150 appear to be the same as for qualifying for the $100 that's mentioned at PNC's website: 1) direct deposit of at least $400, and 2) at least 10 debit card purchases.

Here's some of the small print as listed at PNC's promo page with my highlights of the important things to note:

New personal checking account must be opened between 7/11/2010 and 7/24/2010. To qualify for a $100 reward, a PNC Bank Visa Check Card must be issued to you, a qualifying direct deposit must be received, and at least 10 purchases made with your Check Card must post to your checking account within 60 days of account opening. To qualify for an additional $25 reward, the first conditions must be met and a minimum of 5 payments must be completed via PNC Online Bill Pay, also within 60 days of account opening. Your checking account must remain open in order for you to receive the $100 or $125 reward, which will be credited to the eligible account within 60 days after all conditions have been met and will be identified as "Promo Reward Cash Trans" on your monthly statement. A qualifying Direct Deposit is defined as a recurring Direct Deposit of a paycheck, pension, Social Security or other regular monthly income electronically deposited into a Free, Performance or Performance Select Checking Account, or the Spend Account for Virtual Wallet. The minimum amount of any single Direct Deposit must be at least $400. The Direct Deposit must be made by an employer or an outside agency. Transfers from one account to another, or deposits made at a branch or ATM, do not qualify as Direct Deposits. Limit of one premium payment per new account legal equity ownership. For this offer, legal equity ownership will be defined by the customer name(s) and social security number(s) on the account. PNC Bank customers with an existing checking account are not eligible for this offer. Offer only available to residents of DC, DE, FL, IL, IN, KY, MD, MI, MO, NJ, OH, PA, VA and WI. Offer may be extended, modified or discontinued at any time and may vary by market.

Some additional details about this Free checking account and the other checking accounts are in PNC Bank's Schedule of Service Charges and Fees. There was some concern in my last PNC post that the debit card would have a fee. This does not appear to be the case for the Free Checking account. The only potential recurring fee I see in the above document is $10 per year for having the Banking Card linked to a checking account. The CSR did not think this applied for the Free Checking. However, terms can vary based on your state so you may want to confirm this.

PNC's Virtual Wallet is composed of a checking account and two savings accounts. One of the savings account is the Growth Account which has a fairly competitive yield of 1.10% for up to $25K (as of 7/12/10). Please refer to my PNC Virtual Wallet review for more details.

In June, PNC Bank announced the completion of the National City conversion which added 1,300 branches to PNC. PNC Bank has been a FDIC member since 1934 (FDIC Certificate # 6384).

Other Bank Bonuses

To find other bonus deals at other banks, please refer to my bank bonus page which has all of my recent bank bonus posts. You can also find additional checking account bonuses, in the Checking Account Deals Forum.

Grand Bank, N.A. has competitive rates on several of its deposit products. Its reward checking account yield is still 4.01% APY on balances up to $25K. This is the same rate that it was when I first reported on this in April 2009. However, the money market account rate has gone down since then. However, the rate is still competitive with a top rate of 1.50% APY on balances of at least $50K. The CD rates are also notable. The best ones include a 2.10% APY 24-month CD and a 1.70% APY 15-month CD. These rates are listed in the bank's rates page as of the morning of 7/01/2010.

It appears a branch visit is required to open an account. Branches are located in Hamilton and Hamilton Square, New Jersey.

The bank's ratings for safety and soundness are a little weak: 2 stars (problematic) at BauerFinancial, 3 stars (performing) at Bankrate.com and an overall health score of 3 out of 5 at DepositAccounts.com (see our Grand Bank financial overview). These ratings are based on 3/31/10 data except for Bankrate which is based on 12/31/09 data. The bank has been a FDIC member since 2002 (FDIC Certificate # 57274).

Searching for the Best Money Market, Reward Checking & CD Rates

• Best Money Market Rates
• Best Reward Checking Rates
• Best CD Rates

Harvest Community Bank is offering a few competitive long-term CD rates and a competitive savings account. The best CD rates include a 3.15% APY 60-month CD, a 2.30% APY 36-month CD and a 2.00% APY 24-month CD. Minimum deposit is $500. The Flexible Savings Account has a top rate of 1.36% APY. This requires a $25K minimum balance. The rates are under 1% for the smaller tiers, but the minimum to avoid monthly fees is only $500. These rates are listed in the bank's rates page as of the morning of 7/01/2010.

A branch visit appears to be required to open an account. Branches are located in the New Jersey cities of Pennsville, Pilesgrove, Elmer and Salem.

The bank's ratings for safety and soundness are fair: 3½ stars (good) at BauerFinancial, 3 stars (performing) at Bankrate.com and an overall health score of 3 out of 5 at DepositAccounts.com (see our Harvest Community Bank financial overview). These ratings are based on 3/31/10 data except for Bankrate which is based on 12/31/09 data. The bank has been a FDIC member since 2000 (FDIC Certificate # 34951).

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 DepositAccounts.com.

Banco Popular has a checking account bonus in which you can get up to $125 for opening their Totally Free Checking and meeting some requirements. The promotion is listed on Banco Popular's checking account page. To earn the full $125, the following is required:

• Up to $25 for your old debit card and unused checks at another bank
• $50 for adding direct deposit
• $50 for using Banco Popular's free online bill pay

There's also a free gift. According to the NY/NJ Banco Popular promo page, the gift is an Easy Living Folding Chair. Here's the small print:

Minimum opening deposit is only $50 ($25 in NY). Customer purchases checks. Bring in your debit card and unused checks from another financial institution and we’ll pay you up to $25. The first ACH direct deposit of $1 or more must be received within 60 days of account opening to receive the $50 cash payment. However, you may have up to an additional 1–46 day grace period beyond such initial 60 day period for the first ACH deposit of $1 or more to be deposited to your account. The duration of such grace period, if any, is dependent upon the day in the calendar month in which you open your account. The first bill must be paid by Bill Pay service within 60 days of account opening to receive the $50 cash payment. The cash payments for direct deposit and Bill Pay are limited to one payment per household, are subject to IRS form 1099-INT, and will be credited to your checking account within 60 days after all conditions have been met. Your account must be open to receive the cash payments. Offer may be withdrawn at any time.

Note that the small print states that the customer purchases checks. On the plus side, Banco Popular's Totally Free Checking has no minimum balance or monthly service charge.

A branch visit is required to open an account. Branches are located in California, Florida, Illinois, New Jersey and New York.

Banco Popular North America is a FDIC member (FDIC Certificate # 34967).

Roma Bank continues to offer several competitive CD rates. The rates have fallen since my April post, but they remain competitive. Three of the best rates include a 3.00% APY 60-month CD, a 2.50% APY 36-month CD and a 2.10% APY 24-month CD. Minimum deposit is $1,000. These rates are listed at the bank's CD page as of the morning of 6/21/2010.

Above the rate table at the bank's CD page, it has a link to the application that can be mailed. However, it states that applicants must reside in the State of New Jersey or in Bucks County, Pennsylvania.

Details about the CDs are available in the bank's truth in savings disclosure. According to this disclosure, the early withdrawal penalty for terms of 1-year and over is 6 months of interest on the amount withdrawn. The grace period is 7 calendar days after maturity.

Branches are located in the New Jersey cities of Trenton, Lawrence Township, Pennington, Bordentown, Burlington, Columbus, Cream Ridge and Manchester Township.

The bank's ratings for safety and soundness are strong: 5 stars (superior) at BauerFinancial, 4 stars (sound) at Bankrate.com and an overall health score of 4 out of 5 at DepositAccounts.com (see our Roma Bank rates and reviews page). These ratings are based on 3/31/10 data except for Bankrate which is based on 12/31/09 data. The bank has been a FDIC member since 1950 (FDIC Certificate # 30041).

Habib American Bank is offering several very competitive CD and IRA CD rates. The highest rates are currently available at the bank's California branches in Los Angeles and Artesia. These include a 2.20% APY 18-month CD and a 3.00% APY 36-month CD. Minimum deposit is $1,500. The rates are 25 basis points lower at its New York and New Jersey branches. All branches offer IRA CD rates that are 25 basis points higher than the regular CD rates. Below is a summary of the best CD rates as shown on the bank's rates page as of 6/15/10:

California CD and IRA Rates as of 6/15/10:

• 3.00% APY 36-month CD (3.25% IRA)
• 2.50% APY 24-month CD (2.75% IRA)
• 2.20% APY 18-month CD (2.45% IRA)
• 1.75% APY 12-month CD (2.00% IRA)
• 1.50% APY 9-month CD (1.75% IRA)

New York & New Jersey CD & IRA Rates as of 6/15/10:

• 2.75% APY 36-month CD (3.00% IRA)
• 2.25% APY 24-month CD (2.50% IRA)
• 2.00% APY 18-month CD (2.25% IRA)
• 1.50% APY 12-month CD (1.75% IRA)

I called the Los Angeles branch this afternoon to confirm these rates. I didn't have a good telephone connection so make sure you confirm this info. The banking rep couldn't say how long these would last. A branch visit is required. According to the bank rep, there's only a 3-month early withdrawal penalty.

Branches are located in New York City and Hicksville, New York; Edison, New Jersey; and Los Angeles and Artesia, California.

Habib American Bank Overview

Habib American Bank appears to be similar to State Bank of India. It's an American bank that's a subsidiary of a large foreign bank. Instead of India, Habib American Bank's parent is headquartered in Pakistan. According to Wikipedia:

Habib Bank Limited commonly referred to as "HBL" and head-quartered in Habib Bank Plaza, Karachi, Pakistan, is the largest bank in Pakistan. The bank has a network of over 1450 branches in Pakistan and 55 branches worldwide.

In 1984, HBL opened its USA bank:

HBL established Habib American Bank in New York with a branch each in Manhattan and Queens, and a US International Banking Facility. HBL also opened a branch in California.

Even though it has international connections, Habib American Bank is a FDIC member (FDIC Certificate # 25093). In addition to being a FDIC member, its financial health is solid: 5 stars (superior) at BauerFinancial, 4 stars (sound) at Bankrate.com and 3 out of 5 at DepositAccounts.com (see our Habib American Bank rates and reviews page). These ratings are based on 3/31/10 data except for Bankrate which is based on 12/31/09 data.

First Choice Bank has some competitive CD and money market rates. Its most competitive CD is the 2-year term which has a 2.25% APY. Other competitive ones include the 1.75% APY 18-month CD, 2.50% APY 3-year CD and the 3.00% APY 5-year CD. Minimum deposit is $1,000. These rates are listed in the bank's FAQs Page as of 6/15/2010.

The bank also has a competitive money market account with a 1.50% APY as of 6/15/2010 for balances from $10K to under $250K. The rate is 1.75% APY for balances over $250,000. This has a history of top rates. My last post on this bank was in January 2009 when the rate for balances from $10K to $250K was 2.50% APY.

It appears a branch visit is required to open an account. The bank is located at 669 Whitehead Road, Lawrenceville, New Jersey.

The bank's ratings for safety and soundness are strong: 4 stars (excellent) at BauerFinancial, 4 stars (sound) at Bankrate.com and an overall health score of 4 out of 5 at DepositAccounts.com (see our First Choice Bank rates and reviews page). The ratings are based on 3/31/10 data except for Bankrate.com which is based on 12/31/09 data. The bank is a member FDIC (FDIC Certificate # 58471).

Searching for the Best Money Market & CD Rates

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• Best CD Rates