Capital One Ups Rates on Six 360 CDs
Capital One increased the rates on six terms of its 360 CDs and 360 IRA CDs this morning. Most noteworthy is the rate increase of the 1-year CD. The APY increased only 10 bps, but it reached 2.50%, which keeps it competitive with the large internet banks. The 18-month CD had the largest rate gain, but Capital One had lowered the rate of this CD in June to an uncompetitive level. Today’s rate gain of 75 bps moved the 18-month APY to 2.50% which brings it back to competitive levels. The new APYs are shown below in bold and are effective as of 9/14/2018. The previous APYs are noted inside parentheses.
- 48 mo - 2.75% (2.60%)
- 36 mo - 2.70% (2.55%)
- 30 mo - 2.60% (2.50%)
- 24 mo - 2.60% (2.50%)
- 18 mo - 2.50% (1.75%)
- 12 mo - 2.50% (2.40%)
The last rate hike of the 360 CDs was on July 31st when the 60-month CD APY reached 3.00%. The 60-month CD rate remains the same today. Today’s new rates don’t move Capital One into rate leader status, but at least they keep them close. All of the 360 CDs are now competitive except for the 6- and 9-month terms.
More details of these 360 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 Capital One CDs and IRA CDs, please refer to our Capital One 360 CD rate table.
One thing to note is that these are 360 CDs from Capital One. Capital One 360 no longer exists as a separate entity. It’s now under Capital One. All of the Capital One 360 products still exist with the same names as before, but they’re now offered from the CapitalOne.com website. CapitalOne360.com now forwards visitors to CapitalOne.com.
360 IRA CDs
Capital One began offering 360 IRA CDs in March (Traditional and Roth) . These IRA CDs currently have the same rates as the regular CDs with the same no-minimum balance requirements.
Capital One 360 CD Details
Capital One 360 CDs have no minimum deposit requirement. Maximum deposit is $1 million. Interest is compounded and credited on a monthly basis. As stated in the Capital One CD account disclosure, the Early Withdrawal Penalty (EWP) reads as follows:
For a CD with a twelve (12) month or shorter term, the penalty is three (3) months interest, regardless of when you redeem the account prior to maturity.
For a CD with a term greater than twelve (12) months, the penalty is six (6) months of interest regardless of when you redeem the account prior to maturity.
POD Beneficiary Designations Are Now Possible
After many years of customer complaints, Capital One has changed its beneficiary policy for 360 deposit accounts. Customers can now designate up to 10 beneficiaries to each account. Once beneficiaries are named, the bank account will be referred to as a "Payable on Death" (POD) account. Unfortunately, there are some issues. I have more details in this post.
Additional 360 CD Details
One downside with Capital One 360 CDs is that they do no allow partial withdrawals of principal during the CD term. If an early withdrawal request is made, the entire principal will be withdrawn and the early withdrawal penalty will be applied.
Besides this issue, Capital One 360 CDs have a lot of positives.
Similar to Ally, Capital One 360 CDs have a 10-day rate lock guarantee which says that they “will apply the highest interest rate available during the funding period, up to 10 calendar days.”
Capital One has made it very easy to manage 360 CDs online. It’s very easy to open, close and manage CDs online without having to contact customer service.
After you have opened a 360 CD, you have the option to set up interest disbursements on your CD. If you want to receive interest payments, you can go online and specify interest disbursements either monthly or yearly with the payments transferred to a Capital One 360 liquid account or to an external linked account. One important limitation is that Capital One only allows changing this option within 20 days of opening your CD. If you do not select this option, then the interest will accumulate on your CD without being disbursed.
Another online option for 360 CDs is setting maturity instructions. By default, the CD is set to renew to the same term. Capital One 360 rates have a history of fluctuating in competitiveness. Thus, it’s a good idea to avoid having the CDs automatically renew. If you forget or are busy at maturity (or during the 10 calendar-day grace period), you could get stuck in a low-rate CD. Capital One makes it easy to change the maturity option so the CD will be closed at maturity and the funds transferred to one of your liquid 360 accounts or to your external linked account.
Lastly, Capital One makes it easy to close a 360 CD early. This can be done online. The CD summary lists the current early redemption value. Next to the early redemption value is a “close” link. By clicking this link, you can close the CD at almost any time and have the funds moved to your checking account. When I tried this in 2016, the CD funds (minus the early withdrawal penalty) were immediately available in my Capital One 360 checking account.
Capital One 360 Liquid Accounts
There were no rate changes today on Capital One 360 Savings, Money Market or Checking accounts. The 360 Money Market Account rate last increased on August 24th when the rate went up 10 bps to 1.85% APY. This APY applies to all balances of at least $10k. Balances below $10k earn 0.85% APY.
Capital One’s 360 Savings Account has been lagging the competition for awhile now. Its rate continues to be 1.00% APY for all balances. The last rate hike was in December when the rate increased from 0.75% to 1.00% APY. Capital One appears to be focusing on keeping 360 Money Market competitive instead of the 360 Savings Account. Unlike the Money Market, the Savings Account has no rate tiers. All balances qualify for the top rate.
Since checks can’t be written from the 360 Money Market, I consider this to be more like a savings account. In terms of features, the only difference between the 360 Money Market and the 360 Savings Account is the balance tiers.
For more details on the 360 Money Market account, please refer to this blog post.
Availability
Headquartered in McLean, Virginia, Capital One has a large branch network in several states, but its online products, under the 360 brand, are only available online or by phone. Any U.S. citizen or permanent resident with a valid Social Security number can open an account at Capital One's website.
CDs may be opened online or by phone (800.289.1992). The opening deposit can be made from an external linked personal checking account or one of your liquid 360 accounts.
Bank Overview
Capital One (FDIC Certificate # 4297) has an overall health grade of "A+" at DepositAccounts.com, with a Texas Ratio of 3.24% (excellent), based on March 31, 2018 data. In the past year, Capital One has increased its total non-brokered deposits by $9.43 billion, an above average annual growth rate of 4.33%. Please refer to our financial overview of Capital One for more details.
Capital One has both a large branch network and a large internet banking unit. The internet banking unit used to operate as Capital One 360. In 2012, Capital One acquired the internet bank, ING Direct, and in 2013, ING Direct was converted into Capital One 360.
How the 1-Year CD Compares
When compared to 210 similar length-of-term CDs from banks and credit unions tracked by DepositAccounts.com, 13 banks and two credit unions offer higher rates than Capital One’ 12-month 360 CD rate. Note, CDs with minimum deposit requirements above $5k were excluded.
| Interest Rate | CD Length of Term | Early Withdrawal Penalty | Bank/Credit Union |
|---|---|---|---|
| 2.75% APY | 12-month CD Special ($500 min) | 180 days | USALLIANCE Financial Credit Union |
| 2.65% APY | 13-month CD Special ($2k min) | 180 days | Synchrony |
| 2.50% APY | 12-month 360 CD (no min) | 3 months | Capital One |
The above rates are accurate as of 9/14/2018.
To review the top CD rates, both nationwide and in your state, please refer to our CD rates table page.
The only time CD interest rates are going to beat inflation is doing a recession and a deflationary period while long term CDs were locked in before the start of the downturn.
But what's the alternative? Take on more risk? (e.g. longer terms, low quality bonds, stocks)
The above is from the Capital One website. Do I understand correctly that Required Minimum Distribution from an IRA CD (which is equivalent to a partial withdrawal from the CD) will not be permitted? Their website makes no mention about Required Minimum Distribution.