Bank5 Connect Boosts 15-Month CD Rate

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Deal Summary: 15-month CD, 2.30% APY, $500 minimum deposit.

Availability: Nationwide, with the exception of Massachusetts and Rhode Island.

The last time a Bank5 Connect CD was listed in the bi-weekly CD Rates Summary was about ten months ago. Following a 30 bps rate increase this week, the 15-month CD now earns 2.30% APY and will be near the top of the nationally available 18-month CD category in next week’s CD Rates Summary. The minimum opening deposit is $500, with no stated balance cap, although the online application states, “At this time, we limit total relationships to $1 million in deposits.”

APYMINMAXINSTITUTIONPRODUCTDETAILS
2.30%$500-Bank5 Connect15 Month CD
Rates as of June 29, 2022.

As stated in the Fee Schedule the Early Withdrawal Penalty (EWP) 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.

Since my August 2021 Bank5 Connect blog post, the “Withdrawal Limitations” section on Account Disclosures page has changed for the better: the phrase, “only if we agree at the time you request the withdrawal,” has been removed. It now reads,

You may make withdrawals of principal from your account before maturity.

You can withdraw interest anytime during the term after it is credited to your account.

Funding can be done by ACH, up to a maximum $500k. Although the first page of the online application states, "You may also fund your account with a check, or a credit/debit card," the maximum credit card funding is $100. CSR stated that credit card funding is offered as a convenience and is "generally used for checking or savings account funding."

While the online application asks, “Would you like to add a beneficiary?,” the FAQs state,

To name a beneficiary on a Bank5 Connect account, please call us at (855) 552-2655. We will need to send you a form – either by email or U.S. Mail – and you will need to fill it out, have it notarized, and return it to Bank5 Connect.

According to the 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 15-month 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 Deposit Insurance page,

  • 100% Deposit Insurance – The DIF insures all deposits above the FDIC limit for Massachusetts savings banks. Based in Massachusetts, Bank5 Connect is a DIF member bank, and all our deposit accounts are covered by DIF insurance.
  • No Residency Requirements – No matter where you live, your Bank5 Connect accounts are covered by DIF.
  • All Deposits, No Limits – Whether you have a Bank5 Connect certificate of deposit, savings account or checking account, your deposits are insured 100% regardless of your balance.
  • It's Automatic and Free – There are no forms or applications required. You automatically receive DIF coverage at no cost upon opening a Bank5 Connect account and making a deposit.
  • Protection You Can Trust – No depositor has ever lost a penny in a DIF member bank, going back more than 80 years.

Availability

Massachusetts-based BankFive launched its internet division, Bank5 Connect, in 2013. Through its online application, Bank5 Connect offers its product line to all U.S. citizens/resident aliens (18 years or older) who have a valid Social Security number, 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.

Unfortunately, we are not able to offer Bank5 Connect services to residents of Massachusetts or Rhode Island. But we’d love to have you as a customer of BankFive,
our community bank based in Massachusetts that’s been serving customers since 1855.

BankFive offers some of the same products, but the rates are lower, e.g., BankFive’s 15-month CD currently earns 1.25% APY.

Bank Overview

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 1.38% (excellent), based on March 31, 2022 data. In the past year, the Bank has increased its total non-brokered deposits by $58.69 million, an excellent annual growth rate of 5.14%. 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 35th largest bank headquartered in Massachusetts, with deposits in excess of $1.4 billion and more than 100,000 customer accounts.

How the 15-Month CD Compares

When compared to the similar length-of-term CDs tracked by DepositAccounts.com that are available within the market area and have minimum deposit requirements of $10k or less, no banks or credit unions have higher rates than currently offered on the Bank5 Connect 15-Month CD. The following table compares the 15-Month CD to the two highest-rate CDs from other credit unions and the two highest-rate CDs from banks.

APYCD Term (Early Withdrawal Penalty)Credit Union/Bank
2.30%15-month CD (EWP=180 days)Bank5 Connect
2.30%18-Month CD (EWP=180 days)Crescent Bank
2.27%20-Month Bump-Up Share Certificate (EWP=90 days)Interior Federal Credit Union
2.25%18-Month Rising CD (EWP=180 days)Rising Bank
2.05%18-Month Money Market Certificate (EWP=maximum 30% of maturity dividends)PenFed Credit Union

The above information and rates are accurate as of 6/17/2022.

To search for the best CD rates, both nationwide and state specific, please refer to our CD rates table page.

Related Pages: 1-year CD rates, nationwide deals, Internet banks

Comments
jimdog
  |     |   Comment #1
I's rather buy US treasuries for liquidity and much higher rates! No EWP
P_D
  |     |   Comment #2
The "EWP" on treasuries is that if you sell them in a rising rate market like we have now you will receive less than you paid for them. On the secondary market you also have a bid/ask spread which means that at the moment you buy them, they are worth less than you paid.   
andybuji
  |     |   Comment #3
Here's an imperfect data point comparing the "EWP" on the two investments. Imperfect because it all depends on the interest rate structure at the time of liquidation.

But if you need to bust out in the near term on a longer CD, it surely favors the treasury route. Compare the penalty on the Merrick 5 yr $250,000 CD at 3.25% with a 270 day EWP ( a somewhat lenient EWP btw with many if not most banks imposing a 365 day EWP for a 5 yr term) - $6094 the day after it settles. Versus the market haircut on a Discover 5 yr CD at 3.2% currently last sold Friday at 99.256 (through Vanguard) - $1860, with part of that ask due to a rate slightly below market at this point.

Seems to me one's decision matrix should also include the distinct possibility that should a recession occur (and some are saying we are already in that process) with rates being cut, that a treasury with today's rate could sell at a premium whereas your CD will always incur the penalty no matter what the rate environment.
P_D
  |     |   Comment #4
"Imperfect because it all depends on the interest rate structure at the time of liquidation."


Precisely.

Yes, you can give a scenario in which the treasury security has a smaller loss than the CD if you cash each out prior to maturity. Immediate redemption is more likely to disfavor the fixed loss of an EWP of course since treasury rates are less likely to change enough in the shorter period between purchase and redemption to flip the conclusion.  But I can just as easily use your example to give a plausible scenario in which you will come out much worse with the treasury than with a CD of equivalent yield and term.

Using your example, suppose one year from the purchase date of the treasury market yields for treasuries with the remaining term on that issue increased by about 100bp to 4.2%. In that case the value of the treasury will have fallen by about $20k. So if you sell/redeem the investment a year after purchase you would come out about $14k worse with the treasury security than with the CD.

The point is that the simplified conclusion that the lack of an EWP on a treasury security is an advantage compared to a CD is inaccurate since it depends on the market scenario around the early redemption.   
andybuji
  |     |   Comment #5
No argument from me. Since this site by it's very nature skews towards deposit accounts, it's worthwhile in these turbulent times to point out a robust strategy can include bank CD's, brokered CD's, and Treasuries. Many here may not realize how simple it is to buy a T bill or note at auction through a broker like Vanguard or Fidelity.
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