Deal Summary: Rate increases on 1-year to 5-year CDs. Most competitive CDs are the 1-year (2.20% APY) and 5-year (2.80% APY).
Barclays raised the rates of five of its CDs today. The 1-year, 18-month and 2-year CD rates increased by 10 basis points while the 4-year and 5-year CD rates increased by 5 basis points. This is Barclays’ second round of CD rate increases since the March Fed rate hike. It was about a month ago when Barclays had a similar round of CD rate hikes. The Online Savings Account rate is still 1.50% APY. This hasn’t changed since January 23rd. The new CD APYs are shown below in bold and are effective as of 5/4/2018. The previous APYs are noted inside parentheses.
- 12 mo - 2.20% (2.10%)
- 18 mo - 2.25% (2.15%)
- 24 mo - 2.30% (2.20%)
- 48 mo - 2.45% (2.40%)
- 60 mo - 2.80% (2.75%)
Barclays CDs have no minimum balance required to open. More details of these Barclays CDs are shown in the following table. You can see the rate history of each CD by clicking on the “details” arrow on the right side of the row. To review all of Barclays CDs, please refer to our Barclays Online CD rate table.
|2.80%||-||-||Barclays||60 Month Online CD|
|2.45%||-||-||Barclays||48 Month Online CD|
|2.30%||-||-||Barclays||24 Month Online CD|
|2.25%||-||-||Barclays||18 Month Online CD|
|2.20%||-||-||Barclays||12 Month Online CD|
These new CD rates aren’t high enough to make Barclays a rate leader, but they do keep Barclays close to the leaders and inline with its competitors like Marcus by Goldman Sachs. Between the December and March Fed rate hikes, Barclays hiked its CD rates four times. So we may see additional CD rate increases before the expected June Fed rate hike.
Thanks to DA reader, Buckeye61, for his Forum post about these rate increases.
Barclays Online Savings Account
After the April CD rate hikes, I was hoping to see an increase in the Online Savings Account rate. Within about a month of the December Fed rate hike, Barclays increased its Online Savings Account rate twice in January, which added 20 basis points to the rate. When the rate reached 1.50% APY on January 23rd, only four internet savings accounts had higher rates. Now there are many savings accounts with higher rates.
Although the Online Savings Account has never been a rate leader, it has remained competitive. Since Barclays started the Online Savings Account in March 2012, there has only been one period of time when the rate was under 1%. That happened on May 2013 when the yield went down from 1.00% to 0.90%. It went back up to 1.00% in December 2014.
Barclays’ Online Savings Account has several nice features such as no minimum balance requirement and no monthly fees. Barclays also has a nice ACH transfer system. ACH transfers are fast, often completing in one business day. Also, large transfers are allowed. I have more details on its ACH system in this blog post.
Overview of Barclays’ Online CDs
CD Early Withdrawal Penalties
As stated in the Terms and Conditions disclosure, the Early Withdrawal Penalty reads as follows:
For a CD Account with a term of 24 months or less, 90 days simple interest on the amount withdrawn subject to penalty. For a CD Account with a term greater than 24 months, 180 days simple interest on the amount withdrawn subject to penalty.
One thing that adds to the competitiveness of Barclays’ 60-month CDs is an early withdrawal penalty (EWP) of 180 days simple interest on the amount withdrawn. If the CD is closed early, the effective yields (that include the impact of the EWP) can sometimes be comparable to competitive short-term CDs held to maturity. With shorter-term rates rising faster than long-term rates, this has become less common.
Barclays 5-year CD rate had a small increase today, and that has helped make the effective yield of the 5-year CD when closed early to be a little more competitive to some of the shorter-term CD yields when those CDs are held to maturity. The effective yield of Barclays’ 5-year CD closed at 4 years (2.48%) exceeds Barclays’ 4-year CD yield held to maturity (2.45%). The effective yield of the 5-year CD closed at 3 years (2.36%) also exceeds (just barely) the yield of the 3-year CD held to maturity (2.35%). However, for the 1-year, 18-month and 2-year terms, the effective yields of the 5-year CD closed early at these times don’t come close to the yields of these CDs held to maturity.
You can see how Barclays’ 5-year CD compares to Ally’s 5-year CD and the shorter-term Barclays’ CDs by using our CD Early Withdrawal Penalty Calculator.
Another nice aspect of Barclays is that they allow partial early withdrawals. If you only need some of the money in a CD, you don’t have to close the CD. You can do a partial early withdrawal. The penalty will only be applied to the part of the principal that is withdrawn. Other internet banks like Ally don’t allow partial early withdrawals. In these cases you have to close the CD if you need access to any of the principal.
Time to Break an Existing Barclays CD?
If you had opened a Barclays 5-year CD just over one year ago, that CD is earning just 1.75% APY. You may want to consider closing it early and moving those funds into a new Barclays 5-year CD that earns 2.80% APY. Due to the mild early withdrawal penalty, you’ll earn more by breaking the CD even after taking into account the early withdrawal penalty. You can see how much better you will do by using our When to Break a CD Calculator.
CD Maturity and Interest Payments
The grace period when a CD matures is 14 calendar days. You can go online to easily change the maturity disbursement options at anytime. In addition to the auto renewal, the options include disburse funds by check, transfer funds to an external account and transfer funds to your Barclays savings account.
You can receive an interest disbursement from your CD on a monthly basis. This can also be easily changed online. You have the option to keep interest in your CD account or transfer it to another account (either the Barclays savings account or a verified external account).
Opening a CD
When you open a CD, you can choose to fund the CD with an ACH transfer. If you’re already a customer, you can fund it from your Barclays savings account, an external account already on record or you can choose to register a new external account. For new external accounts, Barclays uses a trial deposit system to verify the external account. Two small deposits will be made to the external account. No withdrawals are done. External account can be a checking or savings account.
Unlike other internet banks that provide for a 10-day or 15-day rate guarantee, Barclays does not have this policy. The rate guarantee ensures that the customer will receive the highest rate on the CD from the day of the CD is opened until the end of the 10- or 15-day period. The customer doesn’t have to worry about missing out on a CD rate hike that happens just days after they open the CD. Even though Barclays doesn’t officially have this policy, you may be able to get the higher rate if you opened a Barclays CD right before the rate increased. Here’s what DA reader, Goldrush, reported in July:
I opened a 5 year CD Sunday night (July 9) at the 2.25% rate. When I read ChasR's post on Depositaccounts.com on Tuesday (July 11) indicating that Barclays raised their 5 year CD rate to 2.30%, I called Barclays and asked if I could get the higher rate on the CD that I opened less than 48 hours ago. The CSR said that she would submit my request to bank management and it would take 2 business days to receive an answer. When I logged into my account 24 hours later, my CD was upgraded to 2.30%. Much better experience than I had with opening a Barclays CD four years ago. Thanks to ChasR for your timely post.
It’s nice to see an internet bank offering this kind of service that you might think you would only see at a brick-and-mortar bank.
For more details on the CD features, please refer to Barclays’ Terms and Conditions document (link is on the bottom of Barclays’ website).
Beneficiary Requirement Change
One thing that has changed at Barclays is the information needed when designating beneficiaries. When I reported on these CDs four years ago, social security numbers were not required for the beneficiaries. Now, social security numbers are required for beneficiaries. When you’re logged into Barclays online banking, there’s an option that allows you designate and change your beneficiaries. There’s now a required field for the beneficiary’s social security number. I asked a Barclays CSR about the reason for this change, and the CSR said it was done as an added verification step for the beneficiary’s identity. I asked the CSR to forward my concern to management that this a major issue for some people who don’t want or can’t get this information.
One thing that has not change is the number of beneficiaries that you are allowed to designate. According to Barclays’ Terms and Conditions document, you may designate up to four beneficiaries.
In a past Barclays CD post, DA reader ChasR provided a useful comment about designating beneficiaries on Barclays accounts:
The online software only provides for a beneficiary who is an "individual" or a "trust." Barclays told me that non-profit, tax-exempt entities qualify for POD treatment and that I should use the "trust" route for designating them. I list the entity and put the TIN after its name to adequately identify it as a charity.
As I described in my article Maximizing Your FDIC Coverage with Beneficiaries, one benefit of designating a non-profit entity as a beneficiary is that you don’t have to worry about losing coverage due to the death of the beneficiary. There is no grace period when a beneficiary dies. You lose coverage immediately. Unfortunately, as ChasR describes, few banks have software that easily accommodate entities as beneficiaries.
Barclays is an internet-only bank that is headquartered in Wilmington, Delaware. According to Barclays’ terms and conditions, “To open an account with us, you must be at least 18 years old, a U.S. citizen or a resident alien with a valid Social Security Number or other Taxpayer Identification Number, and have a residential address in the United States.” Opening an account, including CDs and Savings, must be done online.
The Barclays internet bank is part of Barclays Bank Delaware which is a FDIC member (FDIC Certificate # 57203). The bank is best known in the U.S. for partnering with companies in offering co-branded credit cards. It's part of the U.S. division of Barclays PLC, a British multinational megabank.
Barclays Bank Delaware has an overall health grade at DepositAccounts.com of “A” with a Texas ratio of 6.27% (excellent) based on December 31, 2017 data. Please refer to our financial overview of Barclays Bank Delaware for more details. The bank has been a FDIC member since 2001.
In February, Barclays PLC made news when the U.K. Serious Fraud Office (SFO) filed charges against Barclays. According to this BBC article, the SFO charged “Barclays Bank PLC with "unlawful financial assistance" related to billions of pounds raised from Qatar in 2008.” Regarding the impact to the company, the article suggested this will have little impact to the bank’s operations. “Even if convicted there are banks (UBS, BNP, Credit Suisse) who have been convicted and continued operating.”
How the 1-Year CD Compares
When compared to 206 similar length-of-term CDs from banks and credit unions tracked by DepositAccounts.com, 8 banks and no credit unions offer higher rates than Barclays’ 12-month CD rate. Note, CDs with minimum deposit requirements of $10k were excluded.
|Interest Rate||CD Length of Term||Early Withdrawal Penalty||Bank/Credit Union|
|2.35% APY||14-month CD ($2k min)||180 days||Synchrony Bank|
|2.27% APY||12-month CD ($500 min)||180 days||KS StateBank|
|2.25% APY||12-month CD ($1k min)||180 days||iGObanking|
|2.20% APY||12-month Online CD (no min)||90 days||Barclays|
How the 5-Year CD Compares
When compared to 182 similar length-of-term CDs from banks and credit unions tracked by DepositAccounts.com, 7 banks and 6 credit unions offer higher rates than Barclays’ 60-month CD rate. Note, CDs with minimum deposit requirements above $10k were excluded.
|Interest Rate||CD Length of Term||Early Withdrawal Penalty||Bank/Credit Union|
|3.15% APY||5-Year Heritage Club Certificate ($1k min)||366 days||Northwest FCU|
|3.00% APY||60-Month Promo CD ($500 min)||365 days||American Bank|
|3.00% APY||5-Year CD ($500 min)||540 days||KS StateBank|
|2.80% APY||5 Year Online CD (no min)||180 days||Barclays|
The above rates are accurate as of 5/4/2018.
To review the top CD rates, both nationwide and in your state, please refer to our CD rates table page.