First Internet Bank Ups Rates On Short-Term CDs

Four months ago, I reported that First Internet Bank (First IB) had raised the rates on most of its CDs, resulting in some of the best APYs offered by internet banks. First IB has added 8-9 bps to its short term CDs, with its 12- and 18-month CDs the most competitive when compared to both brick-and-mortar banks and internet banks.

The minimum deposit for any First IB CD is $1k, with no stated balance cap. They are also available as IRAs (Traditional, Roth, and CESA), earning the same APY and the same funding requirements.

As I mentioned in yesterday’s CD Rates Summary, First IB’s CDs (as are most CDs) are on a flattening yield curve, with only 80 bps between its 12-month CD (1.47% APY) and 60-month CD (2.27% APY). If you’re not familiar with the term, a flat yield curve occurs when there is little different between short- and long-term rates.

According to First IB’s CD Overview page, the Early Withdrawal Penalty for the 12- or 18-month CD is 180 days interest.

One concern with internet banks is the ability to access the funds from maturing CDs. 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 that’s not to your liking,

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.

When I spoke with CSR, I had hoped there might be a third option to retrieve funds, ideally an ACH transfer back to the original funding account. CSR cited the two methods listed in the FAQs as the only options available.

Availability

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 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.

Bank Overview

First Internet Bank has an overall health rating of "A" on DepositAccounts.com, with a Texas Ratio of 4.53% (excellent), based on March 31, 2017 data. In the past year, First IB increased its total non-brokered deposits by $346.19 million, excellent annual growth rate of 28.04% 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 17 years, First IB accumulated accolades (including being named #1 Online Bank by Gomez Advisors in 2001), while expanding in size and scope. Currently, First IB holds assets in excess of $2 billion and continues to be recognized as a top online bank.

How the CDs Compare

When compared to 200 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 second.

When compared to 142 similar length-of-term CDs tracked by DepositAccounts.com, requiring a similar minimum deposit and available nationally, First Internet Bank’s 18-month CD APY currently ranks second.

The above rates are accurate as of 6/7/2017.

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