CIT Bank 1-Year Term CD Rate Rises to the Top (2.50% APY)

Late last week, CIT Bank raised the rate of three of its Term CDs. The most noteworthy of the three is the 1-Year Term CD which now has a 2.50% APY. The other two include an 18-month Term CD (2.50% APY) and a 13-month Term CD (2.25% APY). All have a minimum opening deposit of $1,000, with no stated balance cap. Interest is compounded daily and credited to the CD monthly.

Thanks to DA reader, WheelinDealin, for mentioning the rate hike in the DA forum.

DA reader, WheelinDealin, also provided a useful comment for existing CIT Bank Money Market and Savings Account customers who wish to use their account to fund a new CIT Bank CD:

you will need to choose the mail-in option when opening the CD online. After you complete the online CD application you will need to call customer service with the new account number and CIT will transfer the funds for you. There is no option online to fund the CD from internal accounts. It is a easy process and took only a few minutes.

The FAQs describe the options to fund a CD, and the option to fund the CD from an existing account is indeed missing. The three options described in the FAQs include Electronic Funds Transfer (ACH), check and wire transfer.

CIT Bank has a fairly comprehensive CD FAQ section (At CIT Bank’s website, click on the “Help” link in the navigation menu and the click on “FAQs”.) However, as is typical with most internet banks, little detail is provided to describe options to receive the funds when the CD matures. CIT Bank’s FAQ just says:

How do I receive my money once my CIT Bank CD matures?

It’s simple to receive your funds. Just sign in to your account and send us a secure message through the secure messaging portal, or call our Contact Center at 855-462-2652.

So I called CIT Bank, and the CSR informed me that the same options to fund the CD are available for receiving the funds (Electronic Funds Transfer, check, wire transfer and transferring to an existing CIT Bank account.) I was told the Electronic Funds Transfer (ACH) option can’t be done through the account management software. You’ll need to call or send a secure message to have this done.

CIT Bank’s FAQs do describe how interest can be withdrawn. As is usual, there’s no penalty for withdrawing interest. The three options include leaving the interest earned in the CD, depositing it to an existing CIT Bank account or depositing it to an external account via Electronic Funds Transfer. Posted interest on your CIT Bank CD can be withdrawn from your account at any time by contacting a CSR.

The FAQs describe the early withdrawal penalties as follows:

What are the CIT Bank CD early withdrawal penalties?

Terms up to 1 year
The penalty we may impose will equal 3 months’ interest on the amount withdrawn.

Terms of more than 1 year up to 3 years
The penalty we may impose will equal 6 months’ interest on the amount withdrawn.

Terms of more than 3 years
The penalty we may impose will equal 12 months’ interest on the amount withdrawn.

Additional CD details are listed in the CIT Bank Agreement for Personal Accounts. This document is available on CIT Bank’s website by clicking on the “Resources” link in the navigation menu and then clicking on “Forms”.

Other CIT Bank CDs

The last big CD deal at CIT Bank was rate gains on CIT Bank’s 11-month No-Penalty CD. In early March, the rate went up to 1.85% APY, and at that time, it was an excellent deal. However, the deal became eclipsed by CIT Bank’s Money Market Account when its rate went up to 1.85% APY in May.

Rates of other CIT Bank CDs have been lagging. Currently, all the other CD rates are even lower than the 11-month No-Penalty CD rate. The highest is the 5-Year Jumbo CD which has been earning 1.75% APY since 2016. The uncompetitiveness of these other CDs suggests that the 1-Year CD may not be competitive a year from now. Thus, if you open the 1-Year CD, you won’t want to miss the grace period when the CD matures. Make sure to mark the maturity date in your calendar. According to CIT Bank’s CD FAQ:

For your convenience, your CD will automatically renew for the same term (at the current rate on the date of your renewal). If you do not want your CIT Bank CD to renew automatically, please notify us up to ten days after the maturity date. Simply call our Contact Center at 855-462-2652 or log in to CIT Bank and send us a secure message.

Another downside with these other CDs being uncompetitive is specific to CIT Bank’s RampUp and RampUp Plus CDs. These CDs give the customer the option to increase their rate once during the term of their CD if CIT Bank’s rates go up. Unfortunately, these rates have not been going up. The last rate increase on the RampUp Plus CDs was in January 2017. This shows the downsides of these bump-up type of CDs. For the bump-up option to be useful, the bank has to raise the bump-up CD rates. As we see in this case, even a rising interest rate environment doesn’t guarantee a rate increase.

CIT Bank Money Market Account

CIT Bank continues to offer a very competitive rate on its Money Market Account. When the rate was raised to 1.85% APY in May, it ranked number one for savings and money market accounts with small minimum balance requirements and that didn’t require new money. Please refer to my May CIT Bank Money Market review for more details.

Availability

Headquartered in Pasadena, California, CIT Bank is a "pure" internet bank, having no brick-and-mortar branches. Accounts can be opened by U.S. citizens or resident aliens, 18 years or older.

Opening an account must be done using CIT Bank’s online application. Funding can be done through an electronic funds transfer from an outside bank account, wire transfer, or mailing a check. As is typical with setting up an ACH transfer, you need to provide CIT Bank with the routing and account number of your outside account.

Beneficiaries

I was told by the CSR that the online application now allows up to six beneficiaries to be designated. Only the legal name of the beneficiary is required. The date of birth and social security number are optional. An organization/charity or a Trust can also be designated as a beneficiary.

Once the account is opened, the beneficiary information is no longer listed online when you log in or in your monthly statements. DA reader ChasR noted this change in 2016. I was told this was done for privacy reasons. You can request that they send you a letter which lists the designated beneficiaries. This would be a good idea, of course, especially if you’re using multiple beneficiaries to extend your FDIC insurance coverage.

Bank Overview

In 2015, CIT Bank merged with OneWest Bank. The resulting institution is a national bank (National Association) and was re-named CIT Bank, N.A. The OneWest Bank brand remains intact, but now operates as a division of CIT Bank, N.A. Deposits at CIT Bank and OneWest will be counted together for purposes of determining FDIC insurance coverage limits. As of March 31, 2018, the Bank now has combined assets of $42.93 billion and $32.21 billion in deposits.

The new bank (CIT Bank, N.A.) took the financial history and FDIC Certificate number of OneWest Bank (FDIC Certificate # 58978). Based on March 31, 2018 data, CIT Bank, N.A. has an overall health grade at DepositAccounts.com of “A”, with a Texas Ratio of 8.81% (excellent) and is currently financially strong. Please refer to our financial overview of CIT Bank for more details.

Don’t confuse CIT Bank with Citigroup Inc., which is the bank holding company of Citibank. CIT Bank is one of the businesses that makes up CIT Group Inc., a bank holding company best known for providing commercial financing and other services to small and middle market businesses.

OneWest Bank used to be IndyMac Bank. Following the FDIC brokered sale of IndyMac in March 2009, the Bank was re-branded as OneWest Bank. A portion of OneWest Bank’s growth came from the acquisitions of failed banks: in December 2009, First Federal Bank of California was acquired, followed by the acquisition of La Jolla Bank in February 2010.

How the 1-Year Term CD Compare

When compared to the 198 similar length-of-term CDs tracked by DepositAccounts that are available nationwide and have minimum deposit requirements of under $10k, CIT Bank’s 1-Year CD ranks first, sharing the top spot with ableBanking, CommunityWide FCU and Connexus Credit Union.

The above rates are accurate as of 7/2/2018.

To review the best CD rates, both nationwide and state specific, please refer to DA’s CD Rates Table page.