I know you’re thinking - a 60-month CD earning 2.25% APY isn’t that exciting, so why am I writing about it. I haven’t written about any Bank of Internet USA (Bofi) product since November 2015, when Bofi was offering a $50 bonus when opening a new Rewards Checking Account. Since that time, its deposit rates have been lackluster, at best. Over the weekend, Bofi raised the rate on the 60-month CD (2.25% APY) by a substantial 75 bps. The minimum deposit is $1k, with no stated balance cap.
As stated in the Disclosure & Agreements, the Early Withdrawal Penalty reads as follows:
CD term of 48 months or greater, twenty four months loss of interest, accrued or not.
This purpose of this blog post is twofold: 1) noting the first rate increase for any Bofi CD since February 2016, and 2) commenting on the state of long-term CDs. I think DA reader, gregk, spoke for many savers/investors when he posted the following comment last week in response to another blog post.
Wake me up when we see 3% again on something.
As I’ve mentioned several times in the recent past, CD rates are on a flattening yield curve, with 5-year CDs seeming to have hit a rate ceiling. Nationally available 5-year CDs can’t seem to get past 2.50%-2.55% APY, with the top-rate local 5-year CD rates only a few bps higher. While there are two 5-year CDs at 3.00% or slightly higher that are available locally (West Virginia’s Tri-Ag FCU and Iowa’s First National Bank), their respective market areas are quite limited, making the rates interesting, but not really relevant to the market as a whole.
Bofi’s Rewards Checking Account currently earns up to 1.25% APY on qualifying balances up to $150k. The 1.25% APY has been in effect since the account was introduced in July 2011.
The Rewards Checking Account is a tiered, interest earning, variable rate account. There are no monthly maintenance fee, no monthly minimum balance requirement, and no overdraft fees. In addition, there are unlimited domestic ATM reimbursements.
The Rewards Checking page details the three ways to control the variable rate:
Your interest rate can be as high as 1.25% based on the following combined rate rewards:
Receive monthly direct deposits totaling $1,000 or more - .4166%
Use Rewards Checking Visa® Debit Card at least 10 times per month for everyday purchases (min $3 per transaction) - .4166%
Use Rewards Checking Visa® Debit Card 15 or more times per month for everyday purchases (min $3 per transaction) - .4166%.
The description of the debit card requirement is a bit confusing, but essentially this is how it works:
- The first 10 POS transactions per month will earn .4166%.
- When an additional 5 POS transactions are completed (for a total of 15 month POS per month), the second .4166% will be triggered.
Headquartered in San Diego, California, Bank of Internet USA is an internet bank exclusively, and offers its product line to all U.S. citizens and resident aliens (18 years or older), who have a valid government ID and a valid U.S. address (PO Box addresses are excluded).
Opening a CD (or any other Bofi account) must be done online, as the Bank has no brick-and-mortar locations.
Bank of Internet USA has an overall health rating of "A" at DepositAccounts.com, with a Texas Ratio of 4.20% (excellent), based on March 31, 2017 data. In the past year, the Bank has increased its total deposit by $633.26 million, an excellent annual growth rate of 11.85%. Please refer to our financial overview of Bank of Internet USA (FDIC Certificate # 35546) for more details.
Founded on the 4th of July in 2000, Bank of Internet USA is one of the first banks worldwide to have offered banking services (specifically deposit accounts and loans) exclusively on the Internet. (While the Bank’s official name was changed to Bofi Federal Bank in 2011, “Bank of Internet USA” continues to be used as its brand name.) Bank of Internet USA is currently the 129th largest bank in the country, with assets in excess of $8.6 billion and more than 4.6 million customer accounts. In April, the Bank was “recognized by S&P Global Market Intelligence as the top public thrift for 2016, retaining the top ranking for a fifth consecutive year.
How the CD Compares
When compared to the 181 similar length of term CDs tracked by DepositAccounts.com that require a similar minimum deposit and are available nationwide, Bank of Internet USA's 60-month CD APY currently ranks eighth.
*Note: Melrose Credit Union is currently operating under an NCUA conservatorship.
The above rates are accurate as of 6/29/2017.