Review of OneWest Bank CD Rates and Terms - Available Nationwide
OneWest Bank continues to offer several competitive CD rates. However, there has been an important change in early withdrawal penalties. First, OneWest just increased its 18-month CD rate to 1.40% APY. The most competitive CD continues to be the 3-year CD which has a 2.00% APY. Minimum deposit is $1,000. These CDs are available nationwide and they can be opened online. They can also opened at the bank's Southern California branches for both CDs and IRA CDs. These rates are listed in the bank's CD rates page as of 2/3/2011.
OneWest's CD Early Withdrawal Penalties
When I last reviewed OneWest's CDs last year, the early withdrawal penalty for the long-term CDs was the typical 6 months of interest. However, this has changed. The account disclosures link is located at the bottom of the rates page. According to page 33 of the account disclosure, the early withdrawal penalty for terms greater than 2 years is:
Greater than 2 years The GREATER of:
(1) 2% of the amount withdrawn; or
(2) a Market Adjustment
(see below)
There's a long paragraph on page 33 which defines "market adjustment". The first sentence provides a summary:
The Market Adjustment estimates the interest cost that we would incur if we were to replace your early withdrawal or closed CD with another “replacement CD” at a higher cost.
In short, it appears this is a way OneWest is preparing for higher interest rates. If rates do go up, the CD account holder may lose any advantage of closing the CD and moving the funds to a higher yielding CD.
For the CDs with shorter terms, the penalties are more typical: 1) 90 days of interest for terms of 91 to 365 days, 2) 180 days of interest for terms of 366 days to 18 months, and 3) 270 days of interest for terms over 18 months up to 24 months.
In addition to these harsh early withdrawal penalties, OneWest could refuse an early withdrawal request based on this part of the disclosure:
CD customers agree to keep their funds on deposit for a fixed period of time. Unless otherwise provided, partial withdrawals are not permitted. If we permit an early withdrawal of principal, we may impose an early withdrawal penalty on the amount withdrawn as follows.
OneWest's Green Savings Account
OneWest had added a new online-only savings account that has some nice features. It's called Green Savings Account. There are no monthly fees, and the top rate applies to all balances. The current rate is 1.10% APY so it doesn't have any advantages over ING Direct's Orange Savings Account. However, it could be useful if you have a OneWest CD that has matured. You should be able to have them transfer the CD funds into your Green Savings Account, and then it would be easy to transfer the money to another bank.
OneWest Bank Overview
OneWest Bank used to be IndyMac Bank. The FDIC completed the sale of IndyMac in March 2009 to new owners who renamed it OneWest. OneWest has grown in the last year from acquisitions of failed banks. In December 2009, it acquired First Federal Bank of California and in February 2010, it acquired La Jolla Bank. OneWest now has 82 branches in Southern California.
OneWest Bank has an overall health score at DepositAccounts.com of 5 out of 5 with a Texas Ratio of 16.97% (excellent) based on September 2010. Please refer to our financial overview of OneWest Bank for more details. The bank has been a FDIC member since 2009 (FDIC Certificate # 58978).
Searching for the Best CD Rates
To search for the best nationwide CD rates and the best CD rates in your state, please refer to the CD rates section of DepositAccounts.com.
Ripoff artists, is the mild form of describing this bank.
#1, perhaps you want the bank to reward you for withdrawing your money early?
I called with specific question of what will happen if I need the money in emergency, let say 15 months down the road and the interest rates for that particular CD is double than mine.
CSR: “You will incur 270 days of interest for terms over 18 months up to 24 months and the difference from the current rate of the newly issued CD and your present CD. “
Example if my CD is at 2% and the new CD of the same terms is 4% at that time, I will have to pay the 2% out of the principal plus the 270 days of penalty.
In other words, we are paying the bank money on our own invested money without any risks whatsoever to the bank.
Hack, I can be a banks under those terms, no liabilities what so ever. The banks usually are allowed to by and sell treasury at will using your money, either 10Y at 3.5% or 30 years at
4.5% and pocket the difference. It does not cost any money for the bank to issue a CD nor to close it. It is all done via ACH federal wire sweep system that the banks are allowed to do it on daily bases for a cost of few pennies.
“#1, perhaps you want the bank to reward you for withdrawing your money early?”
If the bank can charge you the difference of the current CD and the future CD rates, why not reward me if I exit my CD at 2% and the current rate at that time is 1%.
Your logic is faulty, #1 and #5 are correct.
The change affected only new accounts opened June 14, 2010, or later, or CDs that were renewed on July 19 or thereafter. While the official disclosure of the new terms was issued in September 2010, OneWest says it gave written notice at time of opening or renewal to those new and renewing accounts affected earlier than September -- thus, it was not applied retroactively.
The changes to early withdrawal penalties occurred in the summer of 2010. The changes are effective for accounts opened on or after June 14, 2010 or renewed on or after July 19, 2010. By opening or renewing an account with us or using the service on or after the effective date, you are deemed to have agreed to such changes.
Dear XXXXXX,
Thank you for contacting OneWest Bank. The changes to our terms and conditions regarding early withdrawal penalties were effective for accounts opened on or after June 14, 2010 or renewed on or after July 19, 2010. If an account was opened prior to June 14, 2010 and has not renewed on or after July 19, 2010, then the changes to the early withdrawal penalties do not apply to that account. For that account, the previous early withdrawal penalty would be applicable.
If you need further assistance, please feel free to call our Customer Contact Center at 1-877-741-9378 (1-877-PH.1.WEST). Our office hours are Monday through Friday 7am-6pm and Saturday 8am-2pm (Pacific Standard Time), or visit our Help Center for a live chat with a Banking Associate Monday through Friday 8am-5pm (Pacific Standard Time) at: https://www.owb.com/Banking.
Thank you for choosing OneWest Bank. We look forward to providing you with exceptional service.