Live Oak Bank (Internet Bank) 1-Year CD Rate Jumps To 2.50% APY

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Deal Summary: CDs – 1-year (2.50% APY), 2-year (2.85% APY), and 5-year (3.20% APY). $2.5k minimum deposit, with a maximum $250k per account.

Availability: Nationwide (internet bank)

While many of us were at a BBQ or the beach for the 4th of July, Live Oak Bank was raising the rates on all its CDs, adding between 15 and 50 bps. Live Oak Bank requires a minimum of $2.5k to open a CD, with a maximum $250k deposit per account. The maximum aggregate balance (including all consumer accounts) is $5 million, and individuals may not have more than 25 consumer accounts at Live Oak Bank.

APYMINMAXINSTITUTIONPRODUCTDETAILS
3.20%$2.5k$250kLive Oak Bank5 Year CD
2.80%$2.5k$250kLive Oak Bank2 Year CD
2.50%$2.5k$250kLive Oak Bank1 Year CD
Rates as of July 21, 2018.

As stated in Live Oak Bank’s Consumer Terms and Conditions document, the Early Withdrawal Penalty reads as follows.

If your account has an original maturity of less than 24 months: The fee we may impose will equal 90 days interest on the amount withdrawn subject to penalty.

If your account has an original maturity of 24 months or more: The fee we may impose will equal 180 days interest on the amount withdrawn subject to penalty.

The small 180-day Early Withdrawal Penalty makes the 5-year CD especially competitive as can be seen using the DA Early Withdrawal Penalty Calculator.

Funding a Live Oak Bank CD must be done through an ACH transfer from an existing checking or savings account at the bank named in the online application. There is a 10 calendar day grace period before a CD automatically renews. Maturing funds can be distributed through an ACH transfer, a wire transfer, or a certified check. Up to five beneficiaries may be added, but all beneficiaries must be U.S. citizens.

When I wrote about Live Oak Bank in March, its CDs exhibited a fairly compressed yield curve, with only 75 bps difference between its 6-month and 60-month rates. While long-term CD rates generally seem to be increasing at a slower rate than those of short-term CDs, Live Oak Bank’s current yield curve has improved, with 120 bps now separating the 6-month and 60-month rates.

Live Oak CD comparison chart

Thanks to DA reader, ChasR, for his recent Forum post about Live Oak Bank’s CD rate increases.

Availability

Headquartered in Wilmington, North Carolina, Live Oak Bank is an internet bank with no brick-and-mortar branches, which offers its product line to U.S. citizens or Permanent Residents with a valid Social Security number.

The first step in establishing a new account is the Get Started page. There is no direct link to Live Oak Bank’s online application for new customers.

Clicking on the “Open Your CD Today” button takes you to a simple form that requests your name and email address. As explained on that page, “To begin the account creation process, please complete the information below.” According to CSR, this is the first step toward initiating the online application process.

While Live Oak Bank’s online application is fairly straightforward, CSR noted that there is no "back button," so extra care needs to be taken when filling out the application. CSR also stated that having a copy of your Driver’s License (or other government-issued ID) uploaded on your computer will insure speedy completion of your online application.

Bank Overview

Live Oak Bank has an overall health grade of "A+" at DepositAccounts.com, with a Texas Ratio of 0.68% (excellent), based on March 31, 2018 data. In the past year, the Bank has increased its total non-brokered deposits by $946.54 million, excellent annual growth rate of 77.64%. Please refer to our financial overview of Live Oak Bank (FDIC Certificate # 58665) for more details.

A quickly growing institution, Live Oak Bank currently has $3.4 billion in assets and more than 31,700 customer accounts. The Bank specializes in small business loans in niche industries, such as self-storage companies, veterinary medicine, funeral homes, as well as more traditional industries like government contracting and hotels.

In addition to having recently marked its 10th anniversary, Live Oak Bank has another reason to celebrate. According to press release issued in January,

Live Oak Bank has reached a milestone in closing its 165th self-storage loan in December 2017 providing more than $350 million in loans to self-storage company owner-operators nationwide.

Live Oak was the largest self-storage lender in the nation in 2016, according to data from the U.S. Small Business Administration (SBA), and made its first self-storage loan in 2015.

How the CDs Compare

When compared to the 205 similar length of term CDs tracked by DepositAccounts.com that require a similar minimum deposit and are available nationally, Live Oak Bank’s 1-Year CD APY currently shares the top spot with 1-year CDs offered by ableBanking, CIT Bank, CommunityWide Credit Union, and Connexus Credit Union.

Interest RateCD Length of TermCredit Union/Bank
2.50% APY1-Year CDLive Oak Bank
2.47% APY12-Month CDState Bank of India
2.45% APY14-Month CD SpecialSynchrony Bank

When compared to the 201 similar length of term CDs tracked by DepositAccounts.com that require a similar minimum deposit and are available nationally, Live Oak Bank’s 2-Year CD APY currently ranks third.

Interest RateCD Length of TermCredit Union/Bank
2.90% APY24-Month Share CertificateCommunityWide Federal Credit Union
2.85% APY25-Month CDUSALLIANCE Financial
2.80% APY2-Year CDLive Oak Bank

When compared to the 181 similar length of term CDs tracked by DepositAccounts.com that require a similar minimum deposit and are available nationally, Live Oak Bank’s 5-Year CD APY currently ranks third.

Interest RateCD Length of TermCredit Union/Bank
3.30% APY60-Month Share CertificateCommunityWide Federal Credit Union
3.25% APY5-Year Term DepositMountain America Credit Union
3.20% APY5-Year CDLive Oak Bank

The above rates are accurate as of 7/6/2018.

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

Related Pages: Wilmington CD rates, 1-year CD rates, 5-year CD rates, nationwide deals, Internet banks

Comments
InterestYields
InterestYields   |     |   Comment #1
For those considering Live Oak Bank (or with accounts already please share experiences), updates according to CSR:

"Individuals must be a United States citizen or Permanent Resident with a valid Social Security Number" to be eligible to open or be a beneficiary so while their current FAQ indicates as stated here "Up to five beneficiaries may be added, but all beneficiaries must be U.S. citizens", a Permanent Resident can also currently qualify as a beneficiary "with a valid Social Security Number. People lawfully admitted to the United States on a temporary basis who have DHS authorization to work are not eligible.. We may request supporting documentation for verification."

In the near future according to CSR Live Oak Bank will also increase their POD/ITF beneficiaries that can be added from 5 up to 10 like Ally Bank which extends FDIC coverage to $250,000 times the number of unique eligible beneficiaries (which can currently be managed online according to CSR). If you're considering allocating more than 250K to a single beneficiary beware FDIC coverage rules get more complicated above 5 beneficiaries.

A good FDIC review for reference is the following PowerPoint from https://www.fdic.gov/news/news/financial/2014/direvocable.pptx pg 26 "Since there are five or fewer unique eligible beneficiaries, we do not consider the fact that there are beneficiaries with allocations above $250,000. We can calculate the deposit insurance (DI) coverage as follows: 1 owner x (5) beneficiaries x $250,000 = $1,250,000" & pg 27 "Coverage Calculation for Six or More Beneficiaries with Unequal Allocations with no uninsured funds: If any beneficiary’s allocation does exceed $250,000, then the default total insurable amount (with no uninsured funds) is a maximum deposit of $1,250,000". Also at https://www.fdic.gov/news/conferences/di-seminar/comprehensive.pdf on pg 40 ("The maximum insurable amount for five or fewer beneficiaries is $1,250,000") & pg 54 ("With six or more unique eligible beneficiaries where the allocation to each and every beneficiary is equal, the deposit insurance coverage is $250,000 times the number of unique eligible beneficiaries. With six or more unique eligible beneficiaries with unequal percentages or dollar amount allocations to the beneficiaries, the deposit insurance coverage is at least $1,250,000"), there's also a FDIC video review at https://www.youtube.com/watch?v=pUYZRPpTfVo (e.g. time cued links https://youtu.be/pUYZRPpTfVo?t=658 & https://youtu.be/pUYZRPpTfVo?t=712.

Allowed to make several $250K per transfer if needed despite listing "ACH Transfer Limit $250,000 day day" at https://www.liveoakbank.com/wp-content/themes/LOB2017/assets/important_documents/Consumer_Fee-and-Limits-Schedule.pdf

EWP or closing accounts according to CSR currently requires contacting the bank such as sending the bank a secure message, waiting for a call back to confirm EWP or closing typically same day, instead of self directed immediate actions at Ally Bank through their web interface.

I noticed on page 7/31 of https://www.liveoakbank.com/wp-content/themes/LOB2017/assets/important_documents/Consumer-Terms-and-Conditions.pdf"We may close your account and impose the early withdrawal penalty on the entire account balance in the event of a partial early withdrawal" but was told their standard bank practice on EWP is (pg 18/31 under CERTIFICATES OF DEPOSIT) "You may make withdrawals of principal from your account before maturity. Principal withdrawn before maturity is included in the amount subject to early withdrawal penalty. You can only withdraw interest credited in the term before maturity of that term without penalty. You can withdraw interest any time during the term of crediting after it is credited to your account. Early withdrawal penalties (a penalty may be imposed for withdrawals before maturity) -If your account has an original maturity of less than 24 months: The fee we may impose will equal 90 days interest on the amount withdrawn subject to penalty. If your account has an original maturity of 24 months or more: The fee we may impose will equal 180 days interest on the amount withdrawn subject to penalty."

See diff EWP at play (Ally Bank Vs Live Oak Bank). Note Ally's 24 month is a Raise Your Rate CD with "opportunity to increase your rate once over the 2-Year term" https://www.ally.com/bank/raise-your-rate-cd):

Ally with 0.05% loyalty reward:

https://www.depositaccounts.com/tools/ewp-calculator.aspx?ids=309743,5207,305287,309741,309740&apys=...

Ally without 0.05% loyalty reward:

https://www.depositaccounts.com/tools/ewp-calculator.aspx?ids=309743,5207,305287,309741,309740

Keep in mind:

Latest CPI & FED Federal Funds Rate while considering real rate of return.

Anyone with accounts at both Live Oak Bank & Ally Bank care to compare their experiences?
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