Deal Summary: 12-month CD, 1.35% APY, $1k minimum, one month Early Withdrawal Penalty
Almost a year ago, I wrote about AloStar Bank of Commerce’s (AloStar) 12-month CD, which had reached an all-time rate high of 1.35% APY on April 12, 2016. The 1.35% APY lasted only 17 days and then dwindled down to 1.05% APY, where it remained until mid-January. While I was glad to see a rate increase for the 12-month CD yesterday, I was a bit disappointed that this new APY isn’t any higher than it was last year at this time.
I was about to move on when I remembered AloStar’s extremely mild Early Withdrawal Penalty (EWP) for CDs with terms of a year or less.
If your account has an original maturity of twelve months or less, the fee we may
impose will equal one month's interest on the amount withdrawn subject to penalty.
This EWP (which is half of Ally's and a third of Capital One's) can transform a good 12-month CD into a very good short-term CD. I discuss this in greater detail in the “How the CD Compares” section below.
While depositing funds into an internet bank is usually a simple procedure, gaining access to earned interest can sometimes be problematic. AloStar provides a variety of ways to disburse earned interest:
- Paid to CD at maturity, semi-annually or annually depending on term selected.
- Deposited to AloStar account monthly.
- Monthly interest check (CDs $10k+).
- Paid monthly to external account via ACH.
Headquartered in Birmingham, Alabama, AloStar Bank of Commerce offers its services and product line to all U.S. citizens, 18 years or older, who have a permanent U.S. address.
Opening a CD (or any other account) must be done online. While AloStar does not have any traditional brick-and-mortar branch locations, it does maintain a commercial lending office in Atlanta, Georgia.
AloStar Bank of Commerce has an overall health grade of "A+" at DepositAccounts.com, with a Texas Ratio of 3.73% (excellent) based on December 31, 2016 data. In the past year, AloStar has increased its total deposits by $95.2 million, an excellent annual growth rate of 14.63%. Please refer to our financial overview of AloStar Bank of Commerce (FDIC Certificate # 59060) for more details.
AloStar Bank of Commerce is a young bank (although they describe themselves "as really a bunch of old hands in the financial industry"), having been established in 2011 following the failure of Nexity Bank. The FDIC arranged for the newly-chartered Alostar to assume all of Nexity’s deposits, and Alostar continued to operate in the same fashion as Nexity - an internet bank. Today, AloStar has assets in excess of $961 million.
How the CD Compares
There are two ways of looking at the 12-month CD: assuming the CD is not broken and comparing it to other 12-month CDs, or breaking it at six months and comparing it to short-term CDs.
Therefore, when compared to the 190 similar length-of-term CDs tracked by DepositAccounts.com, which require a similar minimum deposit and are available nationally, AloStar Bank of Commerce’s 12-Month CD APY currently ranks sixth.
When compared to the 182 short-term CDs tracked by DepositAccounts.com, which require a similar minimum deposit and are available nationally, the APY for AloStar Bank of Commerce’s 12-Month CD (broken at six months) currently ranks first.
The above rates are accurate as of 3/30/2017.