BMO Alto Hikes Rates of Long-Term CDs to Market-Leading Levels
In my September review of BMO Alto, I mentioned its Online CDs were competitive, but not market-leading. After rate increases this week, two of its Online CDs now have market-leading rates. Its 60-month Online CD rate increased 75 bps to 5.25% APY, and its 48-month Online CD rate increased 70 bps to 5.20% APY. It’s the first major bank in this rate cycle to offer direct 4-year and 5-year CD rates over 5%.
| APY | MIN | MAX | INSTITUTION | PRODUCT | DETAILS |
|---|---|---|---|---|---|
| 5.25% | - | - | BMO Alto | 60 Month Online CD | |
| 5.20% | - | - | BMO Alto | 48 Month Online CD |
For those looking to lock in 5%+ long-term direct CDs before rates start falling, this is your chance. In the last two weeks, new-issue, non-callable brokered 4-year and 5-year CD rates have risen above 5%. Today, the highest 4-year and 5-year new-issue, non-callable CD rate at Fidelity was 5.05% (issued by Wells Fargo). Brokered CDs pay out interest, so if you look at BMO Alto’s Online CD interest rates (5.11% for the 5-year and 5.06% for the 4-year), they are close to the top brokered CD rates. It’s nice to see a bank offer online CD rates that compare favorably with top brokered CD rates. We’ll see if other online banks follow.
BMO Alto’s four shorter-term Online CDs are not as competitive as these two long-term Online CDs, but they’re still competitive, especially when compared to the well-established online banks.
| APY | MIN | MAX | INSTITUTION | PRODUCT | DETAILS |
|---|---|---|---|---|---|
| 5.65% | - | - | BMO Alto | 12 Month Online CD | |
| 5.50% | - | - | BMO Alto | 6 Month Online CD | |
| 5.10% | - | - | BMO Alto | 36 Month Online CD | |
| 5.00% | - | - | BMO Alto | 24 Month Online CD |
BMO Alto Online CD Details
BMO Alto currently offers six CD terms from six months to 60 months. The Online CDs have no minimum deposit or minimum balance requirements. In addition to Online CDs, BMO Alto offers an online savings account that has maintained competitive rates since it was launched in the summer. The no-minimum Online Savings account can be useful for the funding of a BMO Alto Online CD. It can also be useful for receiving the funds when the CD is closed. Please refer to my September BMO Alto review for more Online Savings account details.
CD Early Withdrawal Penalties and Limitations
First, it’s important to note that BMO Alto has wording in the Online CD Deposit Account Disclosure that gives the Bank the right to refuse an early withdrawal request:
We reserve the right to permit withdrawals of principal only upon maturity. If we permit you to make an early withdrawal of principal before maturity, you will pay an early withdrawal penalty.
If an early withdrawal is allowed, the following early withdrawal penalties (EWP) will be applied:
CD Term - 11 months or less: You will be charged 90 days interest.
CD Term - 12 months or more: You will be charged 180 days interest.
These are mild early withdrawal penalties. The effective yields of the 5-year CD when closed after two, three, or four years are close to the yields of 2-, 3- and 4-year CDs at Ally Bank when those CDs are held to maturity.
A withdrawal early into the term has the potential to eat into the principal:
If the amount of the penalty exceeds the amount of your accrued and unpaid interest, then a reduction of principal would be required in order to pay the penalty.
Further account details are provided in the Deposit Account and Online Banking Agreement. Section V that starts on page 8 details additional terms applicable to all accounts. Paragraph K on page 9 reads, “We can close your Account at any time for any reason.” This could be used to close your CD early, like a callable CD. This type of language is fairly common in bank disclosures, and the risk of the bank making use of this clause is low. It should be noted that this risk exists for any bank. If a bank fails and is closed by regulators, the FDIC or an acquiring bank may choose to close your CD early.
CD Funding and Other Details
The following information is based on the online documentation and a conversation with CSR:
- Funding – ACH or internal transfer
- Interest – Compounded daily/credited monthly, interest can be paid via ACH or internal transfer to a BMO Alto savings account.
- Maturing Funds – ACH, or internal transfer to a BMO Alto savings account. Official check can also be mailed.
- Grace Period – 10 calendar days before automatic renewal. Advance Maturity Instructions can be given to close CD at maturity.
Availability and Account Opening
As an online division of BMO Bank N.A., BMO Alto accounts can only be opened online at the BMO Alto website. Mobile users must also open accounts via the website. BMO Alto doesn’t have an app. Existing BMO Bank customers must create new BMO Alto credentials to open BMO Alto accounts.
BMO Alto accounts are available to U.S. citizens and U.S. resident aliens of age 18 and older. Only individual and joint accounts can be opened. According to the BMO Alto FAQs, “an account can’t be opened by a business, trust, or in a fiduciary capacity.”
Before BMO Alto, BMO Bank N.A. had been offering an online savings account and online CDs to customers who lived outside BMO Bank’s branch footprint. That limitation no longer exists with BMO Alto. People in any state are eligible to open BMO Alto accounts.
Account Opening Details
- Ownership – Individual or joint only
- Beneficiaries – up to 5, equal shares, Social Security numbers required.
- Credit Check – Soft pull by Transunion, ChexSystems
Bank Overview
BMO Alto is a division of BMO Bank N.A. an FDIC member. BMO Bank N.A.is part of the bank holding company, Bank of Montreal. In Canada, the bank operates as BMO Bank of Montreal, a public company that trades on the Toronto Stock Exchange under the symbol, BMO. In the U.S. it does business as BMO Financial Group, a public company that trades on the New York Stock Exchange under the symbol BMO.
As an online division of BMO Bank N.A., BMO Alto operates under BMO Bank’s FDIC Certificate and shares the BMO Bank’s financial history. Deposits made through BMO Alto are not separately insured by the FDIC and count towards your FDIC deposit insurance limit at BMO Bank.
BMO Alto/BMO Bank N.A. has an overall health grade of “A+” at DepositAccounts.com, with a Texas Ratio of 2.95% (excellent) based on June 30, 2023 data. In the past year, BMO Bank’s non-brokered total deposits have increased by $58 billion, an average annual growth rate of 44%. This is rated as an excellent growth rate, but it should be noted that this large increase is due to BMO’s acquisition of Bank of the West in February 2023. BMO has an excellent capitalization level (13.04%), the result of holding $263.34 billion in assets with $34.35 billion in equity. Please refer to our financial overview of BMO Alto/BMO Bank N.A. (FDIC Certificate # 16571) for more details.
In early September 2023, the Bank officially changed its name from BMO Harris Bank N.A. to BMO Bank N.A. In February 2023, BMO completed the acquisition of Bank of the West, which had $92 billion in assets and around 500 West Coast branches. The merger resulted in the 14th largest U.S. bank by assets.
How the 48-Month Online CD Compares
When compared to similar length-of-term CDs tracked by DepositAccounts.com that are available nationwide and have minimum deposit requirements of $10k or less, no banks or credit unions have higher rates than currently offered on the BMO Alto 48-month Online CD. The following table compares the 48-month Online CD to the two highest-rate CDs from credit unions and the two highest-rate CDs from other banks.
| APY | CD Term (Early Withdrawal Penalty) | Credit Union/Bank |
|---|---|---|
| 5.20% | 48-Month Online CD (EWP=180 days) | BMO Alto |
| 5.00% | 50-Month Promo Share Certificate (EWP=180 days) | Chartway Federal Credit Union |
| 4.99% | 4-Year Regular Certificate (EWP=365 days) | Advancial |
| 4.85% | 36-47 Month CD (EWP=360 days) | First National Bank of America |
| 4.75% | 4-Year Bread Savings CD (EWP=365 days) | Bread Financial |
How the 60-Month Online CD Compares
When compared to similar length-of-term CDs tracked by DepositAccounts.com that are available nationally and have minimum deposit requirements of $10k or less, no banks or credit unions have higher rates than currently offered on the BMO Alto 60-month Online CD. The following table compares the 60-month Online CD to the two highest-rate CDs from credit unions and the two highest-rate CDs from other banks.
| APY | CD Term (Early Withdrawal Penalty) | Credit Union/Bank |
|---|---|---|
| 5.25% | 60-Month Online CD (EWP=180 days) | BMO Alto |
| 5.19% | 5-Year Regular Certificate (EWP=365 days) | Advancial |
| 4.90% | 60-Month MYSB Direct Online CD (EWP=all earned interest) | M.Y. Safra Bank |
| 4.86% | 60-Month CD (EWP=180 days) | Self-Help Credit Union |
| 4.80% | 48-59 Month CD (EWP=540 days) | First National Bank of America |
The above information and rates are accurate as of 11/7/2023.
To look for the best CD rates, both nationwide and state specific, please refer to our CD Rates Table page.
I have a fundamental problem with being forced to get Mommy's permission to have my allowance....especially for longer term certificates. This one is an automatic "no" for me.
P.S. A 180 day EWP is worthless if they choose not to "permit you to make an early withdrawal"
If you think you're going to need the money before it matures don't open it, or you can ladder CDs or you could even ladder this bank's CDs or you can sit it in a money market. I don't think banks or credit unions are in the business of opening and closing CDs just because a customer has changed their mind for some reason, probably why some banks and credit unions have raised their ewp's as of late.
Btw, sure I'll guarantee it, how do you plan on collecting?
Btw, I actually thought the discussion here would be about this rate on a long-term CD, which is good news.
Withdrawals before the maturity date are subject to an early withdrawal penalty. The credit union may require up to 60 days written notice prior to any intended withdrawal in accordance with federal credit union bylaws.
The results of a "nudge" in either direction are fairly predictable. Increased regulation (for example, for FDIC/NCUA to require FIs to more strictly honor the EWP policies which those FIs state), would obviously lead to greater "compliance", but also to almost certainly lower APY rates offered by those same FIs, over time.
Decreased regulation of same, will likely lead to the opposite in both cases. Not rocket science, by any means.
On the contrary, I'm quite aware of the saga of "Mr. T." When I was a young(er) adult, I avidly watched his antics on the then-popular TV show "The A-Team". Perhaps you might have seen it?
https://en.wikipedia.org/wiki/Mr._T
It's rather difficult to ascertain how Mr. T's world-view might apply to today's politics (except of course for the famous "I pity the fool... " quote), but then, who knows? Perhaps you do?
;)
If not by ACH, then how?
The issue date of the 5-year Treasury Note (CUSIP: 91282CJF9) was 10/31/2023. Since 10/25/2023, the yield on 5-year Treasury Notes has decreased considerably to 4.53% as of 11/7/2023 (see: https://home.treasury.gov/resource-center/data-chart-center/interest-rates/TextView?type=daily_treas...
Funding was very easy also. During the application process they ask for your funding account data. Then you can choose to give those credentials and connect automatically to your funding account. I chose that option and they connected immediately. The funding will be done by ACH. Your other option is to give your funding account data and they will connect with the old two small deposits method.
Website is clean and simple. You have to wait for funding to be completed to add beneficiaries and to select where you want monthly interest to be paid, if desired. What a relief to find a bank that does not torture you to open an account !
Also Advancial has a higher APY than BMO (5.4% for their jumbo 5 yr CD).
Ladder CD's. You will always have one maturing to get that 7% you expect in 3-4 years. Keep saving and get new CD's. Soon you will be getting the longest and or highest rate with each one. Let them compound for an even better rate.
We have done long term CD's since the 1970's and only cashed them in when the matured when we found another home. Keep adding to them as they mature and go out for as long as you can for the best rate.
I agree with Ally6770 on the positive benefits of laddering. Additionally, your comment makes it clear that you value flexibility and ownership of your long term asset decisions. Therefore, simply look for reasonable Early Withdrawal Penalties on any longer term certificates you are considering. Just make sure the bank or credit union does not require THEIR consent to access YOUR money. There is absolutely no reason for a depositor to grant this right to a bank or credit union with all of the competing products in the market place. And, the more of us who reject these consent requirements, the sooner banks and credit unions will drop them. We are treated in the way that we allow ourselves to be treated.
Your Account is an interest-bearing Account. The terms
governing our payment of interest are explained in the Deposit Account
Disclosure. These terms, including rate of interest, computation of
interest, maturity conditions, minimum deposit requirements, fees and
other terms are subject to change at our discretion. Interest begins
to accrue on the Business Day we receive the deposit. We will not
pay interest on any deposited Item that is returned to us unpaid. Tax
reporting applicable to your Account will be reported to the Internal
Revenue Service and consolidated with any other tax reporting for your
other BMO deposit accounts under the TIN for the Primary Account Owner.
First, check DA. It will sometimes pop up in reviews here as Ken did with this BMO Alto certificate. Typically, this will be addressed either in the Truth In Savings (TIS) Disclosure and/or the Member/Deposit Agreement. Unfortunately, this does not necessarily mean you can "easily get access". You will likely have to call and ask for a blank TIS and copy of Member/Deposit agreement. In my opinion, you should never rely on a support agent to answer the question correctly. Always review the written agreements.
relating his CSR conversation, and subsequent disclosure corroboration obtained
by DA reader xjones several pages into the application process, this appears to
be a variable rate 'market-indexed'-like, callable CD.
Can anyone conclusively demonstrate otherwise? If not, I'd pass!
Per customer reviews, it is hard to reach CSR of BMO Alto by phone. This bank doesn't have a brick and motor branch in case the funds are needed and CSR is unreachable. However, 100K invested in a CD that pays 4.9 APY will make $2,133.23 less in 5 years than at BMO Alto. I wish more high rate long term CDs would be available soon. It is hard to tell if we are at the peak of long term CD rates. So, there are factors to think about before making a decision to lock a 5 yr CD with BMO Alto.
Let me shorten that, I opened a CD first and then had to go back thru the same process to open the savings account.
Tried to open another one so I have time but they declined my coapplicant that was already approved to be co-applicant on the other CD...... needless to say that was enough for me, I decided not to open a CD here.
Why didn’t you choose them to start with?
That their own reps have never heard of them doesn’t seem implausible given some of my experiences with Bank (and CU) reps, hehe.
Ken, I think this would be a relevant question to include in your already excellent existing list of CSR questions when you contact an institution. Thanks