Big CD Rate Hikes at Capital One, 5-Year CD Now 2.30% APY

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Deal Summary: 5yr CD, 2.30% APY; 2yr CD, 1.60% APY; 18mo CD, 1.45% APY; no minimum deposit

Availability: Nationally available

Capital One increased the rates on four of its 360 CDs this morning. The 5-year CD rate had the largest increase. The APY is now 2.30%, up by 30 basis points. The 2-year CD rate also had a sizeable increase, up 15 basis points to 1.60% APY. The 18-month CD rate increased 10 basis points to 1.45% APY, and the 9-month CD rate increased 20 basis points to 0.60% APY.

It was just two weeks ago when Capital One’s 1-year CD rate shot up. Capital One now has very competitive online CD rates with terms from one to five years. With the Fed expected to hike rates tomorrow, this should be just the beginning of deposit rate hikes.

APYMINMAXINSTITUTIONPRODUCTDETAILS
2.30%--Capital One60 Month 360 CD
1.60%--Capital One24 Month 360 CD
1.45%--Capital One18 Month 360 CD
Accounts mentioned in this post. Rates as of March 24, 2017.

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 or maximum balance cap. 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 an especially 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

One new feature that Capital One recently added to their 360 CDs is the 10-day rate lock guarantee. As stated in the CD account disclosure , the guarantee reads as follows:

We will lock interest rates for up to 10 calendar days if you fund your account within this time period. We will also match any interest rate increases during this 10-day period, up to the time you fund your account.

This looks very similar to the Ally Ten Day Best Rate Guarantee.

A noteworthy aspect of Capital One’s 360 CDs is their online CD management software that makes it very easy to open and close CDs. To test this software, I opened up a small 360 CD at Capital One last year. Once the CD is opened, you can view the details of the CD when you log in. An important detail listed is 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 CDs do have some downsides. First, Capital One does not permit partial withdrawals of principal during the term of the account. If a withdrawal request is made, the entire principal will be withdrawn and the early withdrawal penalty will be applied.

Another downside is that Capital One does not allow payable-on-death (POD) beneficiaries on their online accounts.

Thanks to DA reader, Denverace, for posting on the news of these CD rate increases in the DA forum.

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 must be made from a personal checking account.

The Capital One account disclosure states:

Account opening deposit must be from a personal checking account only. Please note:

We don't accept brokerage, money market or savings accounts (institutions put restrictions on these types of accounts that prevent electronic transfers).

If your check has the words "Payable Through" with another bank name listed near the memo field, it can't be linked.

Bank Overview

Capital One (FDIC Certificate # 4297) has an overall health grade of "A" at DepositAccounts.com, with a Texas Ratio of 6.22% (excellent), based on December 31, 2016 data. In the past year, Capital One has increased its total non-brokered deposits by $11.17 billion, an excellent annual growth rate of 5.47%. 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 CDs Compare

When compared to 199 similar length-of-term CDs tracked by DepositAccounts.com that are available nationally, Capital One’s 24-month 360 CD is tied with Connexus Credit Union and EverBank for the highest rate:

Interest RateAccount NameCredit Union/Bank
1.60% APY24-Month 360 CD (no min)Capital One
1.60% APY24-month CD Special ($5k min)Connexus Credit Union
1.60% APY24-month Yield Pledge CD ($5k min)EverBank

When compared to 180 similar length-of-term CDs tracked by DepositAccounts.com that are available nationally, Capital One’s 60-month 360 CD has the fourth highest rate. However, it’s tied with EverBank and State Farm Bank for the highest 5-year CD rate at an internet bank. Out of the top seven 5-year CDs, Capital One’s CD has the smallest EWP.

Interest RateCD Length of TermEarly Withdrawal PenaltyInternet Bank
2.75% APY5 Year Bump Term Deposit Special ($500 min)12 monthsMountain America Credit Union
2.42% APY5 Year Share Certificate ($5k min)formula basedMelrose Credit Union
2.34% APY5 Year Smart Certificate ($20k min)12 monthsMelrose Credit Union
2.30% APY5 Year 360 CD (no min)6 monthsCapital One Bank
2.30% APY5 Year Yield Pledge CD ($5k min)15 monthsEverBank
2.30% APY5 Year CD ($500 min)18 monthsState Farm Bank

The above rates are accurate as of 3/14/2017.

To research the best CD rates, both nationwide and in your local area, please refer to our CD rates table or our Rates Map page.

Comments
moneysaver
moneysaver   |     |   Comment #1
"Another downside is that Capital One does not allow payable-on-death (POD) beneficiaries on their online accounts."

I had a couple of online CDs with 5 year terms that just finished in the past year. They were originally opened online thru the regular Cap One at the time, not Cap One 360, and at least when those were opened, they did allow POD designations for my CDs.
DOnkey
DOnkey   |     |   Comment #2
I actually called Cap One and the CS agent told me that they do not allow beneficiaries for their CD accounts (though they do allow for most of their other accounts). For me, this is a deal breaker. Too bad, 6 mo EWP on a 5-year CD is good by today's standards (though it's possible they can change the EWP terms).
rlh
rlh   |     |   Comment #3
No POD beneficiaries is a deal breaker for me as well. I was considering rolling over a 5 year Ally CD to get the Capital One 2.3% rate even through the EWP is 6 months vs 5 on the Ally. No POD beneficiaries, no deal!
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