New Internet Savings Accounts and CDs at airbanking

MainStreet Bank in Virginia has started a new internet bank called airbanking, and there's a high-yield savings account with a 4.00% APY. To quote a car rental commercial, "not exactly". I thought this intro would provide some fond memories of the good ol' days when high-yield savings accounts actually had high yields. This 4.00% APY is for the junior airsavings account, and as you would expect for a kid's savings account, the 4.00% APY only applies to balances up to $1,000. The portion of the balance above $1,000 earns 1.10% APY (as of 7/15/2011).

The main online savings account for adults is called the airsavings, and its yield is just a little above average for internet savings accounts: 1.10% APY on all balances (as of 7/15/2011). The main downside to this savings account is the fees for ACH transfers. According to the fee schedule there's a $2.50 fee when you initiate inbound or outbound transfers.

There's also two internet checking accounts, but both have potential fees.

The most noteworthy feature of airbanking is its internet CDs which ironically aren't even shown on the main website. To see them you have to go into the online application. Clicking on any of the "apply now" buttons will take you to the same application start page. If you click "new account" on that page, and check the privacy policy and disclosure on the second application page, you'll reach the account selection page. This page is where you can select the CDs and see the current rates. I called the bank at (877-924-7360) about this, and I was told that people in any state can open the CDs from this application. According to the CSR, they are working on adding a CD section on the airbanking website.

It might be good that this bank doesn't clearly list the CD rates since the rates are very competitive. Hopefully, this will keep the demand down and allow the bank to offer these for a while. As of 7/15/2011, the most competitive rate is the 4-year CD with a 2.50% APY. The 3-year and 5-year are also fairly competitive. Below is the full list of rates as of 7/15/2011:

• 0.80% APY 6-month CD
• 1.15% APY 1-year No-Penalty CD
• 1.25% APY 1-year CD
• 1.50% APY 2-year CD
• 2.00% APY 3-year CD
• 2.50% APY 4-year CD
• 2.60% APY 5-year CD

Minimum deposit is $500. I wasn't able to find the CD disclosure, but according to the CSR, the early withdrawal penalty is 6 months of interest if closed after 6 months from opening. If closed before 6 months, it's only 3 months of interest.

The online application allows you to fund the CD with either a check or with an ACH transfer. The application requires you to print and mail in the signature card.

The CD closure procedures don't appear too customer friendly. I was told that you have to request for them to send you a form that you will need to fill out if you want to close a CD. According to the CSR, they are working to allow customers to fill out this form online.

If you live in the Washington DC metro area, you can open these CDs in person at one of the MainStreet Bank Virginia branches. There's a rate sheet on MainStreet's website, and these rates are currently the same as what are listed on the airbanking online application.

MainStreet Bank is a small bank with four branches and $248 million in assets. It has an overall health score at DepositAccounts.com is 5 stars (out of 5) with a Texas Ratio of 6.35% (excellent) based on March 2011 data. Please refer to our financial overview of MainStreet Bank for more details. The bank has been a FDIC member since 2004 (FDIC Certificate # 57742).

How These CD Rates Compare

As I mentioned above, airbanking's 2.50% APY 4-year CD rate is the most competitive of their CDs. It currently takes the number one spot for the best nationally available 4-year CD rate. The next highest is 2.45% APY at Alliant Credit Union and Fort Knox FCU.

The other terms are also competitive, but there are other nationally available CD rates that are higher.

Searching for Top CD Rates

To search for nationwide CD rates and CD rates in your state, please refer to the best CD rates section of DepositAccounts.com.