Capital One Has Rate-Leading 18-Month CD

Capital One did something that is rare. It increased a CD rate to a market-leading level. The rare event occurred on Thursday when Capital One increased the APY of its 18-month 360 CD from 1.50% to 2.50%. Capital One often has competitive rates on its CDs, but they are rarely top rates for online banks.

In 2021, the Capital One 360 18-month CD rate was stuck at 0.25%. That’s only one tenth of its current value. All banks had low rates in 2021, but not this low. For example, in 2021, 18-month CD rates were 0.60% at Ally Bank and 0.55% at Marcus. Capital One began to increase the rate of its 360 18-month CD in late January. Since that time, there have been eight rate increases.

Capital One’s other 360 CD rates are falling behind. Their last rate increases were in early June when the 1-year APY increased 20 bps to 1.50% and the 5-year increased 10 bps to 2.60%. The APY of the 5-year 360 CD is now only 10 bps higher than the 18-month’s APY. To review more rates, please refer to the rates section of the DA Capital One page.

360 Performance Savings Account

In addition to the 18-month CD rate increase, Capital One increased the rate of its 360 Performance Savings account. The APY increased from 0.90% to 1.00%.

In 2021, the 360 Performance Savings rate was stuck at 0.40%. It didn’t start moving up until last April, when the rate increased 20 bps to 0.60%. It went up another 10 bps in May, and so far in June it has gone up 30 bps in three separate rate increases. The last time the APY was 1.00% was in August 2020. Before the pandemic hit, the APY was 1.70%. With the federal funds rate now equal to the federal funds rate when the pandemic hit, we should see many more rate hikes at Capital One.

The 360 Performance Savings account was launched in late 2019. For new accounts, it replaced the 360 Savings Account (which used to be the original ING Direct Orange savings account) and the 360 Money Market Account (which was launched in 2016.)

The 360 Performance Savings account is a typical online savings account with no minimum balance requirements and no monthly maintenance fees. For more details, please refer to my 2019 review of the 360 Performance Savings account.

Important Capital One 360 CD Features

Capital One used to offer IRA 360 CDs, but they are no longer available.

Capital One 360 CDs have no minimum opening deposit requirement, “however, your Certificate of Deposit account may not exceed $1,000,000.”

At the bottom of Capital One’s Online CDs page, there’s the section “Certificates of Deposit: 101” which includes several useful FAQs. Three of the most useful ones include:

Do CDs pay monthly?

Capital One 360 CD interest is accrued daily and is compounded and credited to your CD account monthly. Choose to receive CD interest disbursements on a monthly or yearly basis (on the anniversary date of the account opening) based on the schedule that works best for you. You can also choose to receive interest payments by transfer to another Capital One account or by transfer to an external linked account. You can change the account that receives the disbursement at any time.

Can I withdraw my money before the CD term is over?

You can always decide to withdraw your money early. However, like with any CD account, there is a penalty for withdrawal prior to the end of your CD term. For 12 month CD accounts (or less), the penalty for withdrawing early is 3 months of interest. For CD accounts longer than 12 months, the penalty for withdrawing early is 6 months of interest. You also cannot make a partial withdrawal during your CD term.

Can I add beneficiaries to a 360 CD savings account?

Yes. You can assign up to 10 individuals as Payable on Death beneficiaries, which means that while you’re alive, the beneficiaries won’t have access to anything in the certificate of deposit account. The only exception is that you cannot assign beneficiaries for a Trust account, where the trustee controls funds for another party. Assigning beneficiaries can give you peace of mind and can result in increased FDIC coverage for your CD accounts up to allowable limits. There are 2 ways that you can manage beneficiaries for your CD accounts.

Capital One 360 CD’s Mild Early Withdrawals Penalties

Another Capital One CD FAQ describes the early withdrawal penalties (EWPs):

For 12 month CD accounts (or less), the penalty for withdrawing early is 3 months of interest. For CD accounts longer than 12 months, the penalty for withdrawing early is 6 months of interest. You also cannot make a partial withdrawal during your CD term.

Process of Closing a 360 CD Early

Five years ago, I wrote about Capital One 360’s online CD management system. You used to be able to close a CD early using the online system. You didn’t need to call a customer service representative. The online system used to provide you with the early redemption value and allow you to close the CD early and move the funds immediately to your Capital One liquid account. That’s no longer the case.

I’m not sure when it changed, but Capital One’s online account management system no longer allows you to close a CD early. Instead, it instructs you to call.

The current online CD management system does allow you to do a few things without contacting a customer service representative. You can change your maturity options so that when a CD matures, the CD can either automatically renew or it can be closed with the funds transferred to a linked external account or one of your liquid Capital One accounts. You can also choose how interest will be paid, but this can be done only within 20 days after the account has been opened or renewed. You can change the account that receives the interest at any time.

POD Beneficiary Designations Are Now Possible

After many years of customer complaints, Capital One changed its beneficiary policy for 360 deposit accounts in the summer of 2018, although not without some issues. My July 2018 blog post describes the initial changes (and problems), while the subsequent December 2018 blog post discusses the addition of an online system for adding and managing beneficiaries. You can still add, edit and remove beneficiaries using the online system.

Up to 10 beneficiaries per account can now be designated, with Social Security numbers required for all beneficiaries. (There is one exception: beneficiaries cannot be assigned to a Trust account.) Once beneficiaries are named, the bank account will be referred to as a "Payable on Death" (POD) account.

Customer Service

When I was reviewing Capital One in November, I tried to contact Capital One customer service in several ways. In summary, I was disappointed. Capital One offers an automated online chat service called Eno. I asked if IRA CDs were available, and it responded by saying “Hmm, I didn't quite understand. Can you try asking a different way? That helps me learn!” I re-phrased the question in a few other ways, but it didn’t help.

When I called Capital One, you first had to go through their messaging system. It wasn’t easy to connect to a human. Once I was finally connected, the customer service representative didn’t seem to have much experience. He struggled to answer questions like the existence of IRA CDs. When I asked about opening a 360 CD at a branch, he just referred me to a branch phone number. When I called that number, I wasn’t able to connect with anyone at the branch.

Availability

Headquartered in McLean, Virginia, Capital One offers its 360 savings products online or at one of its branch locations. Any U.S. citizen or lawful permanent resident, 18 years or older, with a U.S. physical address or a military address (APO or FPO) and a valid Social Security number, can open an account at Capital One.

In the past, 360 savings products were only available online, but that is no longer the case. According to an FAQ on opening CDs, “you can open a Capital One 360 CD online or at one of our locations.”

Capital One’s 360 CD Disclosure describes how your CD can be funded when opened online:

You "link" your Capital One account to a personal (non-business) checking or savings account at another U.S. chartered bank ("Linked Account") to fund your CD account. Or you can transfer money from an eligible Capital One checking or savings account to fund your CD.

In the online application, Capital One provides this instruction regarding opening a joint account:

First, you'll need to open an individual account. Then, you can add the other person as a joint account holder online.

Bank Overview

Capital One has an overall health grade of "A" at DepositAccounts.com, with a Texas Ratio of 3.36% (excellent), based on March 31, 2022 data. In the past year, Capital One has increased its total non-brokered deposits by $19.59 billion, an excellent annual growth rate of 6.65%. Please refer to our financial overview of Capital One (FDIC Certificate # 4297) for more details.

Capital One acquired the internet bank, ING Direct, in 2012 and shortly afterward, ING Direct was transformed into Capital One 360. Operating as a subsidiary of Capital One Financial Corporation for about four years, Capital One 360 was absorbed in Capital One in 2017. Although Capital One 360 no longer exists as a separate entity, the Capital One 360 products are still available from Capital One.

Capital One Financial Corporation is a financial holding company whose subsidiaries include Capital One, N.A., and Capital One Bank (USA), N.A. The combined total assets of both subsidiaries are in excess of $507 billion, with more than 300 branches operating primarily in the District of Columbia, Louisiana, Maryland, New Jersey, New York, Texas, and Virginia.

How the 18-Month 360 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 a higher rate than offered on Capital One 360 18-month CD. The following table compares the 360 18-month CD to the two highest-rate CDs from other banks, the two highest-rate CDs from other major online banks and the two highest-rate CDs from credit unions.

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

How the 360 Performance Savings Account Compares

When compared to nationally available Money Market Accounts and Savings Accounts tracked by DepositAccounts.com, that do not require large balances or direct deposit, and do not have small balance caps, the 360 Performance Savings APY ranks well below the rate leaders. The following table compares the 360 Performance Savings APY to the two highest-rate savings accounts from other banks and the two highest-rate savings accounts from other major online banks.

To look for the best rates on liquid bank accounts, both nationwide and state specific, please refer to our Money Market Accounts Table and Savings Accounts Table.

The above information and rates are accurate as of 6/25/2022.