Northern Bank Direct Ups 9-Month CD Rate To Near Market-Leading Level
In April 2023, Massachusetts-based Northern Bank Direct (NBD) substantially increased the rate on its 9-month CD to 5.50% APY. That rate-leading APY was in effect for about two weeks before it plummeted back to its previous 0.40% APY. In a bit of rate déjà vu last week, NBD again boosted 9-month CD APY from 0.40% to 5.50%. The opening deposit must be at least $500 and is capped at $250k.
It is possible that the current 5.50% APY will be as short-lived as it was nine months ago. The rest of the NBD CDs also experienced dramatic rate increases (335 bps to 460 bps) last week, vastly improving the previous rates that ranged from 0.40% APY to 0.65% APY. Based on NBD’s history (and the current rate environment), I don’t expect these new CD rates to last very long. Anyone opening an NBD CD should keep an eye out for rate drops: no one wants to be auto-renewed into a low-rate CD.
Early Withdrawal Penalty
As stated on the FAQs page, the Early Withdrawal Penalty (EWP) reads as follows:
Term of less than 12 months: 6-months interest Term of 12 months to 35 months: 12-months interest Term of 36 months to 47 months: 24-months interest Term of 48 months or greater: 36-months interest New account closure penalty: $25 if closed in first 120 days
According to CSR, CDs must be closed early; partial withdrawals are not allowed and the principal is not protected. The $25 new account closure penalty is in addition to the other stated EWPs.
Money Market Premier Account
In July 2023, NBD boosted the rate on its Money Market Premier (MMP) to 4.95% APY on balances up to $250k; that rate is still in effect. For a more detailed look at the MMP, please refer to my February 2023 blog post.
| APY | MIN | MAX | INSTITUTION | PRODUCT | DETAILS |
|---|---|---|---|---|---|
| 3.75*% | $0 | $250k | Northern Bank Direct | Money Market Premier | |
| OTHER TIERS: 0.10% → $250k+ | |||||
Availability and Account Opening
Launched in 2017 as the internet division of Massachusetts-based Northern Bank, Northern Bank Direct offers its product line nationwide through its online banking platform.
Individual and joint accounts can be opened, but opening a CD in the name of a trust requires some preparatory work: according to CSR, NBD must approve the trust before a CD can be opened. In addition, NBD does not allow beneficiaries on any NBD account.
Opening a CD or a Money Market Premier account can only be done using the NBD online application. According to the FAQs,
BUT,Can I open a Northern Bank Direct account at a Northern Bank branch?
Northern Bank Direct accounts can only be opened online.
Can I visit my local Northern Bank branch to transact on this [MMA] account?
Yes, you may visit any Northern Bank branch to conduct a transaction on a Northern Bank Direct account.
Northern Bank has 13 full-service branches located in northeast Massachusetts.
CD Funding and Other Details
The following information was obtained from the FAQs and a conversation with CSR.
- Funding – ACH* (up to 3 days), wire, check, or internal transfer. Must be funded within 14 days of opening.
- Ownership – Individual, joint, or trust.
- Interest – Compounded daily/credited monthly and can be transferred penalty-free to an NBD liquid account, ACH to external account, or by check.
- Maturing Funds – ACH, wire, cashier’s check, or internal transfer to an NBD Money Market Premier account.
- Beneficiaries – Not allowed.
- Grace Period – 10 calendar days before automatic renewal.
- Credit Check – Chex Systems
*”If you are an existing customer and open a new account online, deposits you make by ACH transfer from another institution for the initial deposit will be made available the next business day.”
Bank Overview
NBD operates under Northern Bank’s FDIC Certificate and shares its financial history. NBD deposits are considered to be held by Northern Bank and will be combined with other accounts held by the depositor at Northern Bank for purposes of FDIC deposit insurance.
Northern Bank/Northern Bank Direct has an overall health grade of “B+” at DepositAccounts.com, with a Texas Ratio of 8.21% (excellent), based on September 30, 2023 data. In the past year, NBD’s total non-brokered deposits decreased by -$97.42 million, a below average annual growth rate of -4.9%. Please refer to our financial overview of Northern Bank/Northern Bank Direct (FDIC Certificate # 18266) for more details.
While Northern Bank Direct is a relatively new institution, Northern Bank is not. Established in 1960 by brothers Jim and Thomas Mawn, it is the largest privately-held, family-run, full-service bank in Massachusetts. In 63 years, Northern Bank has grown to become the 19th largest bank in the state, with deposits in excess of $2.4 billion and more than 36,000 customer accounts. From 2010 to 2017, Northern Bank was rated by the S&P Global Market Intelligence Ratings as the top New England bank with assets of $500 million to $5 billion. Northern Bank was also named as one of the S&P 2021 “Top 100 Best-Performing Community Banks” (under $3 billion in assets).
How the 9-Month CD Compares
When compared to similar length-of-term CDs tracked by DepositAccounts.com that are available nationally and have minimum deposit requirements of $10k or less, one credit union has a higher rate than currently offered on the NBD 9-Month CD. The following table compares the 9-month CD to the four highest-rate similar length-of-term CDs from other banks/credit unions with nationwide market areas.
The above information and rates are accurate as of 1/29/2024.
To look for the best CD rates, both nationwide and state specific, please refer to our CD rates table page.
