Deal Summary: CD rate hikes: 5yr CD, 2.30% APY; 2yr CD, 1.75% APY; 18mo CD, 1.50% APY; no minimum deposit
Capital One increased the rates on six of its 360 CDs this morning. Most notably, the 5-year CD rate is back at 2.30% APY. This repeats the 5-year CD rate increase Capital One did in March of this year. The 2.30% lasted about six weeks. Since March, rates overall have risen, but most of the gains have been on liquid accounts and short-term CDs. Long-term CDs have lagged in the rate hikes, and that can be seen with today’s rate increases at Capital One. The 2.30% APY is still a competitive rate for a 5-year CD. It becomes more competitive when you consider the mild early withdrawal penalty and the lack of a minimum deposit requirement.
|2.30%||-||-||Capital One||60 Month 360 CD|
|1.75%||-||-||Capital One||24 Month 360 CD|
|1.50%||-||-||Capital One||18 Month 360 CD|
The other CD rate increases are not as noteworthy since the new rates aren’t as competitive as the 5-year rate. A summary of the rate increases is shown below.
- 1.50% APY 18-month CD (was 1.10%)
- 1.75% APY 24-month CD (was 1.20%)
- 1.75% APY 30-month CD (was 1.25%)
- 1.75% APY 36-month CD (was 1.30%)
- 1.75% APY 48-month CD (was 1.50%)
- 2.30% APY 60-month CD (was 2.00%)
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.
Capital One 360 CDs have no minimum deposit requirement. Maximum deposit is $1 million. 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.
Effective Yields When 5-Year CD Is Closed Early
The 6-month EWP makes the 5-year CD a good deal, and unlike many other banks, Capital One’s online management software for its 360 CDs makes it very easy and quick to close the CD early (I have more details of this software below.) You can see all the effective yields when this 5-year CD is closed early in our Early Withdrawal Penalty Calculator. Below are a few of the effective yields:
Effective Yields of the 5-Year 360 CD When Closed Early:
- 1.15% when closed early at year 1
- 1.73% when closed early at year 2
- 1.93% when closed early at year 3
- 2.03% when closed early at year 4
Additional 360 CD Details
The main issue with Capital One 360 accounts continues to be Capital One’s refusal to allow beneficiary designations (i.e. POD or ITF) to accounts. This isn’t clearly mentioned at Capital One’s website. I called today, and confirmed that they continue to not allow beneficiary designations.
Another downside with Capital One 360 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 the above two issues, Capital One 360 CDs have a lot of positives.
Just like 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 (and 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 last year, the CD funds (minus the early withdrawal penalty) were immediately available in my Capital One 360 checking account.
Capital One 360 Liquid Accounts
Capital One 360 Money Market and Checking accounts have also had recent rate increases. However, the 360 Savings account rate has been holding at 0.75% for more than four years. For more details on the 360 Money Market account, please refer to this blog post.
|1.20*%||$10k||-||Capital One||360 Money Market|
|OTHER TIERS: 0.60% → Up to $10k|
|1.00*%||$100k||-||Capital One||360 Checking|
|OTHER TIERS: 0.20% → Up to $50k | 0.75% → $50k - $100k|
|0.75%||-||-||Capital One||360 Savings Account|
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.
Capital One (FDIC Certificate # 4297) has an overall health grade of "A+" at DepositAccounts.com, with a Texas Ratio of 4.97% (excellent), based on June 30, 2017 data. In the past year, Capital One has increased its total non-brokered deposits by $10.46 billion, an excellent annual growth rate of 5.13%. 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 5-Year CD Compares
When compared to 180 similar length-of-term CDs tracked by DepositAccounts.com that are available nationally with similar minimum requirements, five banks and nine credit unions have higher rates than Capital One’s 60-month 360 CD. Below is a sample of some of these CDs to show how they compare with Capital One’s CD.
|Interest Rate||CD Length of Term||Early Withdrawal Penalty||Internet Bank|
|2.60% APY||5 YearTerm Deposit ($500 min)||12 months||Mountain America Credit Union|
|2.40% APY||5 Year CD ($500 min)||9 months||GS Bank|
|2.35% APY||5 Year CD (no min)||6 months||Barclays|
|2.30% APY||5 Year 360 CD (no min)||6 months||Capital One Bank|
The above rates are accurate as of 10/13/2017.