This used to be a hot deal. It's not quite as hot, but it remains a good deal due to some unique featues of this CD. Inter National Bank is offering a 5-year add-on CD with a 2.50% APY that allows unlimited additional deposits during the term. Deposits must be at last $250. Minimum initial deposit is $1,000. Another nice feature is that the early withdrawal penalty is 90 days of interest. These rates and features are not listed on the bank's website. I called the bank's El Paso branch yesterday (2/10/2011), and I was informed of these. Rates are subject to change at anytime.
This used to be a much hotter deal when I first posted on this in October 2010. At that time the yield was 3.25%. However, even with the current yield, the add-on feature and small early withdrawal penalty help make it a much better deal.
A branch visit is required to open an account. However, they don't seem to limit accounts to their local market. So you may be able to open an account if you don't mind traveling. If are considering a long trip, make sure you confirm all the details with the branch manager before the trip.
Branches are located in the Texas cities of Brownsville, Laredo, El Paso, McAllen and Weslaco.
The bank has an overall health score at DepositAccounts.com of 3 out of 5 with a Texas Ratio of 47.97% (average) based on September 2010 data. Please refer to our financial overview of Inter National Bank for more details. The bank has been a FDIC member since 1985 (FDIC Certificate # 25879).
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Add-On Certificates of Deposit
An add-on feature provides a nice hedge against a long low-rate environment. When your other CDs mature, you can always fall back on the add-on CD. In addition, this can come in handy if your CDs are closed early due to bank failures. When banks fail, the new banks that take over are free to lower the rates on existing CDs. Many have lowered rates so they are no longer competitive even by today's standard.
It's rare to find banks or credit unions offering CDs with unlimited add-on deposits. I had one local credit union that had offered these, but in 2009 they limited these CDs to terms of only one year. That doesn't provide much help against a long low-rate environment. Another popular credit union, Northwest Federal Credit Union, has long offered 1-year and 2-year add-on CDs. These used to have competitive rates, but now the yields are only 0.65% and 1.00%.