Colorado Federal Savings Bank CDs Had Been Rate Leaders (Update 6/21)
As DA reader, rockies, noted in a Forum post on Saturday,
Colorado Federal Savings Bank (CFSB) today made a very aggressive move on CD rates across its product line. In many key CD durations, CFSB is now the rate leader among banks and credit unions that offer their products nationwide.
With rates increases of between 65 and 81 bps, Colorado Federal Savings Bank (CFSB) CDs will probably be at the top of several national available rate categories in this week’s upcoming CD Rates Summary. The minimum opening deposit for any CFSB CD is $5k, with no stated balance cap.
Note: Links to all the documents referenced below can be found on the CFSB FAQs page or the Certificate Rates page.
As stated on the Savings & CDs page, the Early Withdrawal Penalty reads as follows.
Early Withdrawal Penalty for withdrawals prior to maturity date equals 1 month of interest on Certificate Term of less than 6 months, 3 months’ worth of interest on Certificate Term of 6 months and one year, and 6 months’ worth of interest for a certificate term over one year.
The mild EWP makes the 60-month CD even more competitive. If a recession reverses inflation and rates fall in the next year or remain stagnant, you’re still earning 3.35% APY; if rates continue to rise, the loss of six months of interest could be offset by a higher rate offered elsewhere.
Looking at this populated CD Early Withdrawal Penalty Calculator, you can see how competitive the effective yields of the 60-month CD are when closed early, particularly when compared to the CFSB 12-month CD.
11-Month No Penalty CD
The 11-Month No Penalty CD had a much more modest increase of 10 bps over the weekend. With a competitive 1.10% APY, the 11-month No Penalty CD compares quite well to 1-year no-penalty CDs but lags behind the Rising Bank 15-month No Penalty CD (1.75% APY). Complete details about the 11-month No Penalty CD can be found in this February blog post.
How the CFSB CDs Work
Note: Links to all the documents referenced below can be found on CFSB’s FAQs page or the Savings & CDs page.
As stated on the Savings & CDs page, the Early Withdrawal Penalty reads as follows.
Early Withdrawal Penalty for withdrawals prior to maturity date equals 1 month of interest on Certificate Term of less than 6 months, 3 months’ worth of interest on Certificate Term of 6 months and one year, and 6 months’ worth of interest for a certificate term over one year.
An early withdrawal penalty may invade principal.
The Disclosure of Account Terms on the Savings & CDs page also states:
At redemption, funds will be returned to the original external account utilized to open the CD. Please fund your CD from an account you intend on keeping open to reduce any delay in the return of your proceeds. If your funding account is closed, we will need to complete a verification of account between us and your new bank before we can Automated Clearing House (ACH) transfer your funds to your account. Colorado Federal Savings Bank does not issue checks to close online accounts.
Long story short, make sure the account you link to the CD when funding is an account you will keep open for the term of the CD, as CFSB is not flexible on this point.
CFSB began to offer PODs about six years ago. According to the FAQs page:
The bank will only allow U.S. citizens and permanent resident aliens with a valid social security number to be added as a POD to an account. PODs can be added via the online application for new customers and secure message for existing customers. The bank will allow four joint owners to be designated on an account and up to five payable on death designations per account in equal percentages.
While CFSB’s position on PODs has changed, their position on trust or business accounts has not: “No, we do not offer trust or business accounts.”
While the FAQ page provides many answers, more detailed information can be found in the Disclosure of Account Terms on the Savings & CDs page.
Availability
As an internet bank, CFSB offers its CDs and Savings accounts to all US citizens (18 years or older) who have a valid Social Security number. While CFSB's headquarters in Greenwood Village (15 miles south of Denver) provided a brick-and-mortar location in the past for local customers, this is no longer an option. Opening any type of account, and all subsequent transactions, must be done online.
Bank Overview
Colorado Federal Savings Bank has an overall health rating of "B+" at DepositAccounts.com, with a Texas Ratio of 0.21% (excellent), based on March 31, 2022 data. CFSB has an excellent capitalization level (12.60% APY), the result of holding $2.06 billion in assets with $259.34 million in equity. Please refer to our financial overview of Colorado Federal Savings Bank (FDIC Certificate # 33111) for more details.
Established in 1990 as a savings institution, Colorado Federal Savings Bank was acquired by new ownership in 2008. The new owners contributed more than $100 million in assets and $10 million of capital “to put the bank on solid footing.” Currently operating as a non-branch direct banking platform, CFSB is Colorado’s ninth largest bank, with deposits in excess of $1.2 billion and more than 166,000 customer accounts.
How the CDs 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 currently offered on the CFSB CDs. The following table compares the CFSB 12-, 24-, and 60-month CDs to the two highest-rate CDs from other banks and the two highest-rate CDs from credit unions.
The above information and rates are accurate as of 6/20/2022.
To look for the best CD rates, both nationwide and state specific, please refer to our CD Rates Table page.
I don't doubt your experience, but just this morning (at another FI) I had an experience where I thought the same thing, but found out that the first CSR I spoke to who was so confident in their answer was wrong which led to a series of unnecessary complications in what should have been a simple administrative process. So I contacted a second CSR who also confidently gave me the wrong information about how to remedy the problem leading to making the problems even worse.
I spent the entire morning this morning straightening out a problem that would never have happened if not for two CSRs who seemed knowledgeable and competent. I am still not 100% sure it is solved pending their confirmation.
One thing I have learned is that I never trust advice about technical issues from front line CSRs. If I cannot talk directly to a person in the department that handles the issue who is personally familiar with it, I always discount the advice. And many FIs will not allow you to talk with the back office (with good reason unfortunately). So if you can't do that you have no choice but to risk getting bad answers even if they sound competent. I really appreciate the CSRs who tell me they don't know the answer. The worst ones are the ones who are confident and wrong.
I called them, and the CSR confirmed they did lower the rates. They had an overwhelming number of applications over the weekend, and now they feel they are too far over market.
"WARNING: The sender of this email could not be validated and may be impersonating a domain. "
This email originated from outside of the organization. Do not click links or open attachments unless you recognize the sender and know the content is safe.
anyone else that is in the process of opening an account have this issue ? Just being pro-active.
Thanks.