Bank5 Connect’s 24-month Investment CD (2.10% APY) is actually an add-on CD, which permits unlimited deposits anytime during the term. The Investment CD has a $500 minimum and a $500k maximum opening deposit.
I’ve written about the 24-month Investment CD three times in the past 26 months. Interestingly enough, the current 2.10% APY is the same rate offered that was offered when the November 2017 blog post was published. Between November 2017 and now, there has been one rate increase (60 bps up) and four rate decreases (60 bps down).
The intrinsic value of Investment CD APY is increased with the add-on feature of “flexible deposits: anytime, any amount!” According to the Account Disclosure,
You may make an unlimited number of deposits into your account.
The 24-month Investment CD landing page states,
Adding money to your Bank5 Connect 24-Month Investment CD is easy – you can transfer funds electronically or you can simply mail us a check.
In a Live Chat yesterday, CSR pointed out that adding funds electronically requires a Bank5 Connect High-Interest Checking account,
as the [Investment] CD account alone will not give you access to our external transfer service. If you have a checking account with us, you may move money between your Bank5 Connect checking account and your external bank accounts.
This is a change from when I last wrote about the 24-month Investment CD in July 2019. I'm not completely confident in the CSR's statement that a checking account is required, since there is no mention of that limitation anywhere on the website.
As stated in the Fee Schedule the Early Withdrawal Penalty reads as follows:
There is an early withdrawal penalty equal to 3 months of interest for CDs with terms less than one year, and an early withdrawal penalty equal to 6 months of interest for CDs with terms of one year or greater.
As stated in the CD FAQs,
How do I receive my money when my CD matures?
When your CD reaches maturity, simply contact us at (855) 552-2655, or log into Online Banking and send us a Secure Mail to let us know what you’d like to do with the funds. You can choose to roll the funds over into a new CD, or we can transfer the funds to another account for you, or mail you a check.
There is a 10-day calendar grace period before the Investment CD renews. Should you opt to not renew, the maturing funds will be transferred to an interest-bearing Bank5 Connect liquid account.
Depositors’ Insurance Fund
In addition to FDIC insurance, Bank5 Connect offers Depositors’ Insurance Fund to all its depositors. According to the Insurance and Your Finances page,
The Depositors’ Insurance Fund (DIF) was established by the Massachusetts legislature in 1934, and at the time the fund was created, it was as an alternative to the FDIC. In fact, Massachusetts savings banks, by state law, were not allowed to join the FDIC.
In 1956, the law was eventually changed to allow Massachusetts savings banks to join the FDIC. For those that did, the DIF became known as an excess deposit insurer, meaning they insured deposits in excess of the FDIC limit. By 1986, all DIF member banks had joined the FDIC, so since then, they've been solely an excess deposit insurer.
The DIF insures all deposits above the FDIC limit in Massachusetts savings banks, and there's no dollar limit to the DIF’s insurance coverage, so they cover everything above the FDIC limit of $250,000.
Add-On CDs - Benefits and Risks
The add-on feature can be very useful for savers as a hedge against falling interest rates. It can be a big win for savers when there’s a large drop in interest rates. This is especially the case when the Add-On CD’s initial minimum deposit is low and when there is no maximum balance. However, that big win for savers becomes a big loss for banks or credit unions. If the institution doesn’t take into account the worst case scenario, the institution may find itself in a difficult position when large add-on deposits are made after major declines in interest rates.
DA readers should be aware that there’s always the chance that an institution may change the terms of their existing Add-On CDs to limit add-on deposits. The October 2019 blog post about GTE Financial Credit Union’s proposed changes (and quick recantation) to the terms on their existing Add-On Certificates is a recent example of this possibility.
Launched in July 2013, Bank5 Connect is an internet division of Massachusetts-based BankFive. Through its online application, Bank5 Connect offers its product line to all U.S. citizens/resident aliens, 18 years or older, with the exception of Massachusetts and Rhode Island residents.
Bank5 Connect's online application re-directs residents of Massachusetts and Rhode Island to BankFive's online application. While BankFive offers some of the same products, the rates are substantially lower, e.g., BankFive’s 2-year Investment CD currently earns 0.65% APY.
Beneficiaries cannot be designated on the online application, but according to CSR,
You cannot name a beneficiary on the application, but you can request the
form once the account is opened. It would need to be notarized and returned to us.
Funding can be done by ACH (maximum $500k) or by mailing a check. Although the first page of the online application states, "You’ll need ... something to fund your new account (credit card, debit card, checking account, or savings account)," the maximum credit card funding is $100. CSR stated that credit card funding is a convenience, "generally used for checking or savings account funding." According to a Live Chat, Bank5 Connect has low ACH limits: “The per in process transaction limit is $6,000. The rolling 30 day limit is $15,000.”
The comments from DA readers on the previous Bank5 Connect blog posts have been mainly favorable, but there has been a continuing issue with the account application process. Specifically, there have been problems in verifying identities and incorrect information based on bad Equifax data. For example, DA reader, Steve, submitted a joint application and immediately received an email stating the application was under review. Steve wrote,
I did a follow-up call this morning with the CSR regarding my application, she stated we answered some security questions wrong & were denied. She stated I could fill out a new application from start & try again & email a copy of DL & utility bill to customer service. She stated they have been getting lots of calls from applicants about not passing the security questions.
Steve’s story ended well.
I quickly went ahead & resubmitted my app , then emailed a scan of our DL & utility bill to the customer service. 30 mins later I received an email from customer service stating, "Your account application has been approved. Once your funding is received you will receive an automated email with online banking login instructions."
If anyone on this site is going thru the process and get denied & want to continue, I would first just send an email with a scan of your DL & a utility bill with your confirmation # on your application to [email protected] & explain to them you were denied & state here is my ID info … this may help you without having to resubmit a new application. even tho I had to make 1 extra call to the CSR & another 10 minutes resubmitting, I feel it was well worth the time spent to get this 24-month addon cd.
I think many of us have run into verification issues because of questions based on something we did 20 years ago, or questions we simply can’t answer. One of my team recently went through a verbal verification process and was completely confounded by the following exchange.
“What month is Eric’s birthday? March, June, or October?”
”Eric who has the same last name as you.”
Having no relatives named Eric, she randomly picked an answer and, of course, guessed wrong.
As an online division of BankFive, Bank5 Connect operates under BankFive’s FDIC Certificate and shares its financial history.
Bank5 Connect/BankFive has an overall health grade of "A" at DepositAccounts.com, with a Texas Ratio of 2.52% (excellent), based on September 30, 2019 data. In the past year, the Bank has increased its total non-brokered deposits by $97.01 million, an excellent annual growth rate of 12.26%. Please refer to our financial overview of Bank5 Connect/BankFive (FDIC Certificate # 23286) for more details.
BankFive was founded in 1855 as the Fall River Five Cents Savings Bank, one of the first Five Cent Savings Banks in America. The “Five Cent” moniker was chosen because these banks required only a 5¢ deposit to open an account. BankFive is currently the 40th largest bank headquartered in Massachusetts, with deposits in excess of $1 billion and nearly 88,000 customer accounts.
How the Investment CD Compares
When compared to 202 similar length-of-term CDs tracked by DepositAccounts.com, which require a similar minimum deposit and are available nationwide, Bank5 Connect’s 24-month Investment CD APY only ranks eleventh, 44 bps lower than the current rate leader, Keesler Federal Credit Union’s 21-month Sep CD. When compared only to other online banks, it’s only 10 bps lower than the current rate leader.
With a low minimum initial deposit and an unlimited number of deposits allowed throughout the term, the 24-month Investment CD’s APY is quite competitive.
The above rates are accurate as of 1/25/2020.
To search for the best CD rates, both nationwide and state specific, please refer to our CD Rates Table page.