About a month ago, I removed all of First Internet Bank’s (First IB) CDs from the bi-weekly Summary, because the APYs were falling behind in the quickly changing competitive rates race. Most of First IB’s CDs will be reinstated in next week’s Summary following this week’s rate increases.
The rate increases were either 15 or 16 bps for all CDs, with the exception of the 60-month CD which added 10 bps. Of all the eight CDs in First IB’s product line, the 12-month is currently the most competitive. Any First IB CD can be opened with a $1k minimum deposit and there are no stated balance caps.
The CDs are also available as IRAs (Traditional, Roth, and CESA), earning the same APYs and with the same funding requirements.
”Steady” is a good word to use when describing First IB’s rate history. No wild fluctuations in rates or flashy rates that disappear quickly. For example, in the past year, the 12-month CD has gained 102 bps in 10 rate increases, with no rate decreases. In that same time frame, all of First IB’s CDs added between 87 and 116 bps.
As First IB tends to increase their CD rates by approximately the same number of bps, the flattening yield curve (relatively small difference between short- and long-term rates) is about the same as it was in March and April. Based on the latest rates, there is only a difference of 62 bps between First IB's 12- and 60-month CDs.
According to First IB’s CD Overview page, the Early Withdrawal Penalty is 180 days interest for 6-, 12- and 18-month CDs, and 360 days interest for 24-, 36-, 48, and 60-month CDs.
First IB permits CDs and savings accounts to be opened in the name of a trust. As stated on the online application,
For any trust accounts, we require copies of trust documents verifying trustee(s).
Please submit via recommended instructions listed at the completion of the application.
Accessing Maturing Funds
Accessing maturing CD funds from internet banks can be a concern, as some institutions make it much easier to deposit your money then withdraw it. According to First IB’s FAQs,
If you notify us in writing prior to the maturity date that you do not wish to renew the CD, we will close the CD on the maturity date and mail a check to you for the balance of your CD.
If you’re looking to have immediate access to maturing funds,
If you also have a First IB checking or savings account, you may use online banking by going to Additional Services, then CD Maturity Options. You can transfer the entire balance of your mature CD into your checking or savings account and close the CD.
Headquartered in Fishers, Indiana, First Internet Bank provides internet banking services and products nationwide. All First IB accounts can be opened online, but First IB does allow CDs/IRA CDs to be opened through the mail.
CD and IRA CD rates are guaranteed as of the postmark date on the
envelope containing the signed application and funding for the account.
First Internet Bank has an overall health rating of "A" on DepositAccounts.com, with a Texas Ratio of 2.04% (excellent), based on June 30, 2018 data. In the past year, First IB has increased its total non-brokered deposits by $324.59 million, excellent annual growth rate of 18.62% growth rate. Please refer to our financial overview of First Internet Bank (FDIC Certificate # 34607) for more details.
Opening its virtual doors in early 1999, First Internet Bank was the first state-chartered, FDIC-insured institution to operate solely via the internet. In the following 18 years, First IB accumulated accolades (including being named #1 Online Bank by Gomez Advisors in 2001), while expanding in size and scope. First IB currently has assets in excess of $3.1 billion and continues to be recognized as a top online bank.
In an December 2017 American Bank article, First IB’s CEO, David Becker, discussed his goal of “convincing doubters a branchless model works.
Do you anticipate such growth continuing?
We’re at 40% growth when the industry is at 3.5% to 5%. We anticipate somewhere in the 30% range next year. The key is great quality assets. We don’t want to grow for the sake of growth. There are good opportunities and we’re able to generate good assets. We have a great deposit base. The advantage we have with a national footprint is, if the economy is a little soft in one part of the country, you have the rest of the country to pull from. Our model makes us stronger in tough economic times than a traditional bank because we aren’t landlocked with a certain set of customers.
How the CD Compares
When compared to 211 similar length-of-term CDs tracked by DepositAccounts.com, requiring a similar minimum deposit and available nationally, First Internet Bank’s 12-month CD APY currently ranks third.
The above rates are accurate as of 10/18/2018.
To look for the best CD rates, both nationwide and state specific, please refer to our CD Rates Table page.