Luther Burbank Savings Offers 18-Month Step Up CD
At the beginning of the week, Luther Burbank Savings (LBS) added an 18-month Step Up CD, which earns a composite APY of 2.83%. According to the Personal Banking Products page, the interest rate for months 1-9 is 2.63%, rising to 2.88% for months 10-18. The minimum opening deposit is $1k, with no stated balance cap.
According to CSR, the Early Withdrawal Penalty (EWP) for the 18-month Step Up CD is 180 days interest.
Opening, Funding, and Accessing
According to the FAQs page,
How can I make my opening deposit?
You may choose to fund your account several ways: via ACH, wire transfer, paper check mailed to the address below, or in person at one of our branches.
What can I expect after my application has been submitted?
The application will be reviewed and you will be contacted at the phone number provided within three business days.
As usual, there is no mention of how maturing CD funds can be distributed. CSR stated there are only two options: cashier’s check or wire ($35 fee). While there is no ACH capability to access maturing funds, DA reader, CapitalClimate, provided an alternate solution in a comment he made on an earlier Luther Burbank Savings blog post:
The maturity distribution options are a bummer, but they
do offer a free checking account with 0 minimum balance.
Availability
Headquartered in Santa Rosa, Luther Burbank Savings’ market area has historically been northern and southern California, specifically the San Francisco and Los Angeles areas.
LBS has recently begun to offer some of its product line (including the Step Up CD) on a nationwide basis. All U.S. citizens and resident aliens, 18 years or older, are welcome to apply regardless of residency.
Opening an 18-month Step Up CD can be done online or by phone (888.201.1233). The Bank also has five southern California branches located in Beverly Hills, Burbank, Encino, Long Beach, and Pasadena, and four northern California branches located in Los Altos, San Jose, San Rafael, and Santa Rosa.
Bank Overview
Luther Burbank Savings has an overall health rating of "A+" at DepositAccounts.com, with a Texas Ratio of 0.94% (excellent), based on March 31, 2018 data. In the past year, the Bank has increased its total non-brokered deposits by $468.02 million, an excellent annual growth rate of 13.84%. Please refer to our financial overview of Luther Savings Bank (FDIC Certificate # 32178) for more details.
Established in 1982 as the Luther Burbank Savings and Loan Association, Luther Burbank Savings is a privately-owned bank with branches throughout California. This past spring, the market area expanded with the opening of a branch in Bellevue, Washington, outside of Seattle. The Bank was named in honor of Luther Burbank, a Santa Rosa resident and horticulturalist, who introduced over 800 varieties of flowers. He was also responsible for the Russet Burbank Potato, the most widely cultivated potato in the U.S. Using Mr. Burbank’s vision of growth and renewal, the Bank focuses on the needs of its customers, as opposed to its public stockholders. Luther Burbank Savings is currently the 19th largest bank in California, with assets in excess of $6 billion and more than 32,000 customer accounts.
How the Step Up CD Compares
When compared to the 163 similar length-of-term CDs tracked by DepositAccounts.com that require a similar minimum deposit and are available nationwide, Luther Burbank Savings’ 18-month Step Up CD APY (blended) currently ranks first.
The above rates are accurate as of 8/18/2018.
To look for the best CD rates, both nationwide and state specific, please refer to our CD Rates Table page.
I expect they will calculate the EWP on the basis of the interest rate you are getting at the time you close. So, if you close after the 9-months mark (and to lose 6 months of interest at or before 9 months would be insane!), then I expect they would calculate the entire penalty on the basis of the post-9-month interest rate, which would amount to more than you might actually have earned in the previous 6 months. (To close after the 15-month mark or later, after which you will have been earning the higher rate for six months, would also almost certainly be a bad idea as that loss in the face of such a short time to go would almost certainly make it a loss to move to a better rate.)
you are breaking the contract.
pay the piper