Northern Bank Direct (NBD) has raised the rates on its long-term CDs this week, but I have to say it’s one of the more unique set of APYs I’ve seen in quite some time: 36-month (2.55% APY), 48-month (2.56% APY), and 60-month (2.57% APY). That’s right – only an increase of 1 bps for each additional 12 months. This is the flattest yield curve I've ever seen.
|2.57%||$500||-||Northern Bank Direct||60-month CD|
|2.56%||$500||-||Northern Bank Direct||48-month CD|
|2.55%||$500||-||Northern Bank Direct||36-month CD|
The CDs can be opened with a $500 minimum deposit and while there is no stated balance cap, the FAQs page states, “The maximum amount you can initially fund your account with is $500,000.”
NBD made its debut about ten months ago, featuring five competitive CDs. Rates at new internet banks often change in tandem; in other words, the rise and fall of CD rates will mirror each other. NBD has not followed that pattern, with each CD finding its own rate path.
As stated on the FAQs page, the Early Withdrawal Penalty (EWP) reads as follows:
Term of 36 months to 47 months: 24-months interest
Term of 48 months or greater: 36-months interest
In addition to confirming the substantial EWPs, CSR stated that partial principal withdrawals are not allowed; any withdrawal of the principal will result in the CD being closed. Accrued interest, on the other hand, can be paid out at any time by check or ACH, or through a transfer to a Northern Bank Direct Money Market Account (MMA). Transferring any interest to an MMA is probably the easiest withdrawal route, but there is a monthly $4 dormant account fee for MMAs with account balances of less than $500 for 12 consecutive months. The $4 fee starts in the thirteenth month.
My April blog post provides more details about the CDs, including NBD’s ACH transfer service.
Money Market Account
In early January, NBD raised the rate on its Money Market Account (MMA) to 1.51% APY. The MMA was added to the product line in April 2017, with an initial rate of 1.05% APY. There have been two rate increases in the past six months, which tacked on an additional 46 bps to the APY. The MMA’s APY now ranks fourth, with 24 bps separating NBD’s MMA rate and the top rate offered by All America and Redneck Banks. The money market rates race continues to be led by internet banks: the current top eight money market rates are being offered by internet banks.
|1.51*%||-||$250k||Northern Bank Direct||Money Market Account|
|OTHER TIERS: 0.01% → $1mm+ | 0.75% → $250k - $1mm|
An NBD MMA provides a place to park funds from a maturing CD, as NBD does not offer the option of transferring funds back to the original funding account via ACH. The three options to receive maturing funds currently include a check, a wire transfer, or a transfer into an NBD MMA. According to CSR, CDs have a 10 calendar-day grace period. A transfer into an already opened MMA is probably the path of least resistance.
As the internet division of Massachusetts' Northern Bank, Northern Bank Direct offers it services and product line on a nationwide basis.
Opening any type of account, including a CD, must be done using NBD’s online application. In addition to the usual personal information, the account number, routing number, and name of the financial institution being used to transfer funds for the initial deposit are required.
As the online division of Northern Bank, Northern Bank Direct operates under the Bank’s FDIC Certificate and shares its financial history.
Northern Bank/Northern Bank Direct has an overall health grade of “B+” at DepositAccounts.com, with a Texas Ratio of 11.32% (excellent), based on September 30, 2017 data. In the past year, the Bank has increased its total non-brokered deposits by $196.91 million, an excellent annual growth rate of 20.67%. Please refer to our financial overview of Northern Bank/Northern Bank Direct (FDIC Certificate # 18266) for more details.
While Northern Bank Direct is a new institution, Northern Bank is not. Established in 1960 by brothers Jim and Thomas Mawn, it's the largest privately-held, family-run, full-service bank in Massachusetts. In 58 years, Northern Bank has grown to become 21st largest bank in the state, with assets in excess of $2.06 billion and more than 29,600 customer accounts.
How the CDs Compare
When compared to the 201 similar length-of-term CDs tracked by DepositAccounts.com that require a similar minimum deposit and are available nationwide, Northern Bank Direct's 36-month CD APY currently ranks second.
When compared to the 170 similar length-of-term CDs tracked by DepositAccounts.com that require a similar minimum deposit and are available nationwide, Northern Bank Direct's 48-month CD APY currently ranks first.
To find the best CD rates, both nationwide and state specific, please refer to our CD rates table.
The above rates are accurate as of 2/22/2018.