Bread Financial Long-Term CD Rates On The Rise, Albeit Slowly

Bread Financial recently increased the rates on the majority of its Bread Savings CDs. Following modest increases of 10 bps, the 4-year Bread Savings CD and 5-year Bread Savings CD both earn 4.75% APY, which is among the highest rates offered by “pure” internet banks on long-term CDs. The current 4.75% APY matches the 5-year Bread Savings CD rate from November/December 2022. By early February 2023, the rate fell to 4.25% APY, where it remained for about six months. Long-term CD rates are slowly rising, but they still trail quite a bit behind brokered CDs.

The minimum opening deposit for any of the Bread Savings CDs is $1.5k deposit, with deposits subject to the following limitation: “Maximum deposit limit of $1 million per account and $10 million limit per customer."

As stated in the Truth-in-Savings disclosure,

You are also subject to a maximum deposit balance across all Accounts of $10,000,000 per Account owner for individual Accounts and $5,000,000 per Account owner for joint Accounts, for a maximum deposit balance limit of $10,000,000 per Account owner.

With respect to joint Accounts, for purposes of determining the maximum deposit balance permissible per Account owner, each joint Account owner will be attributed an equal portion of the balance of the joint Account. For purposes of calculating the maximum aggregate deposit balance permissible, for each Account owner and in each Account, deposit balances include:

• All Online Savings and CD Accounts held by the same Account owner at the Bank; and
• Principal plus interest earned and credited but not withdrawn.

Early Withdrawal Penalty

Bread Financial does not allow partial withdrawals: only early closures are allowed, which could result in a reduction of the principal.

You are not permitted to withdraw a portion of your principal at any time prior to maturity. You may withdraw the entire principal amount prior to maturity, but you will be charged an early withdrawal penalty.

As stated in the Truth-in-Savings for Certificates (TIS) document, the Early Withdrawal Penalty reads as follows:

If the CD term is less than 12 months, the penalty is 90 days’ simple interest on the principal at the rate in effect for the CD;

If the CD term is 12 months to three years, the penalty is 180 days’ simple interest on the principal at the rate in effect for the CD; and

If the CD term is four years and up, the penalty is 365 days’ simple interest on the principal at the rate in effect for the CD.

In Section 4 of the TIS, "Types of Accounts", the last sentence applies to CD Accounts, and states, "Early withdrawals of principal prior to the maturity date are restricted."

High-Yield Savings Account

The High-Yield Savings Account (HYSA) APY was increased about a month ago and currently earns 5.15% APY on all balances. In the past twelve months, a total of 225 bps have been added in a series of ten rate increases. The minimum opening deposit is $100; the HYSA is also subject to the “Maximum deposit limit of $1 million per account and $10 million limit per customer" limitation.

Funding and Accessing

Deposits made to the HYSA can be done by check, ACH, wire transfer, or transfered from another Bread Financial account. There is no limit on the number of external accounts that can be linked. According to CSR, the average hold time for an ACH transfer is between 1-3 business days, with hold times for larger amounts (six figures plus) being slightly longer, but a variety of reviews by DA readers dispute those hold times. (See DA Reader Reviews below.)

This is a standard online savings account with no ATM/debit card; any withdrawals must be made through ACH or wire. There are no dollar limits on ACH withdrawals initiated by an external bank. There is no excessive transaction fee for withdrawals in excess of the standard six withdrawals per statement cycle, because withdrawals beyond the six are not permitted. If you do attempt to make a seventh withdrawal, Bread Financial may “deny and/or reject the transfer, and we may close your Account.”

Potential Fees

While a Bread Financial account is fee-free (including free monthly maintenance, ACH transfer, online statements, and incoming wire transfers), there are three fees which can be charged:

• $5 per request for paper statements
• $15 per request for paper check withdrawal
• $25 per request for outgoing wires

Reviews by DA Readers

It is a good bank if you just want to park extra money you have for a great interest rate. if you are going to make frequent transactions for large sums then you should look elsewhere.

Three important issues have been noted by DA readers in reviews of Bread Financial:

• Having to recreate links to an external account after the account is opened. The link that was created during the application and initial funding process is not maintained.
• Actual hold times are much longer than the theoretical hold times mentioned by CSR: ten business days for the first 30 days and 5 business days thereafter.
• Small outgoing ACH transfer limits of $5k per day and $30k per month.

The May 11, 2022 review (Easy to Move Your Money In, Hard To Get It Out) written by DA reader, vaylie, is definitely worth reading. vaylie begins by stating,

Re-posting my old review since their name change wiped out almost 60+ old negative reviews on this site.

While the Bread Financial rebrand did trigger a new DA page, all the previous reviews written about Comenity Direct mentioned by vaylie can be found using this link.

Availability and Account Opening

Headquartered in Columbus, Ohio, Bread Financial offers accounts to U.S. citizens and resident aliens, 18 years or older, who have a valid Social Security number and a current street address in the U.S. (no PO Boxes allowed).

Only individuals may open a Bread Financial sole or joint ownership account. Custodial accounts and trust accounts are not permitted, but as mentioned above, trusts can be named as a beneficiary.

As a “pure” internet bank, Bread Financial has no brick-and-mortar branches. Opening an account can only be done online.

Funding and Other Details

The following information is from the Truth-in-Savings for Certificates disclosure and a conversation with CSR.

• Funding – ACH, wire, or internal transfer.
• Interest – Compounded/credited monthly. Automatic monthly transfers to a linked external account or to another Bread Financial account can be done by setting up a recurring transfer.
• Maturing Funds – ACH, wire ($25 fee), cashier’s check, or internal transfer.
• Beneficiaries – Unlimited, percentages can be assigned, Social Security numbers are not required. Charities/non-profits cannot be named as a beneficiary, but trusts can.
• Grace Period – 10 calendar days before automatic renewal.
• Credit Check – Soft pull.

The Deposit Account Terms document provides a great deal of useful information about the ins-and-outs of Bread Financial transactions for all accounts.

Bank Overview

Bread Financial has an overall health grade of "A" at DepositAccounts.com, with a Texas Ratio of 11.07% (excellent) based on June 30, 2023 data. In the past year, Bread Financial increased its total non-brokered deposits by $1.95 billion, an excellent annual growth rate of 34.09%. Please refer to our financial overview of Bread Financial (FDIC Certificate # 57570) for more details.

When I wrote about the now-defunct Comenity Direct in early March 2022, I stated,

While Comenity Direct is the newest member of the Comenity family, Comenity Bank and Comenity Capital Bank have 30 years of experience of providing financial services. Comenity is best known for its private-label and co-branded credit cards at more than 100 retailers.

All that changed in late March 2022 when the Bread Financial rebrand occurred. According to an April 25, 2022 press release,

Bread Financial (NYSE: BFH), a tech-forward financial services company that provides simple, flexible payment, lending and saving solutions, announces its former Comenity Direct consumer deposit brand is now Bread Savings. The name change reflects the rebranding of Alliance Data to Bread Financial, which was announced on March 23.

All Comenity Direct, Comenity Bank, and Comenity Capital Bank accounts are now housed under the Bread Financial umbrella.

How the 4-Year Bread Savings CD Compare

When compared to similar length-of-term CDs tracked by DepositAccounts.com which are available nationwide and have minimum deposit requirements of $10k or less, one bank and two credit unions have higher rates than currently offered on the Bread Financial 4-Year Bread Savings CD. The following table compares the 4-Year Bread Savings CDs to the two highest-rate CDs from other banks and the two highest-rate CDs from credit unions.

How the 5-Year Bread Savings 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, two banks and two credit unions have higher rates than currently offered on the Bread Financial 5-Year Bread Savings CD. The following tables compares the 5-Year Bread Savings CD to the two highest-rate CDs from other credit unions and the two highest-rate CDs from banks.

The above information and rates are accurate as of 10/30/2023.

To look for the best CD rates, both nationwide and state specific, please refer to our CD Rates Table page.