Popular Direct Pushes 5-Year CD To 3.50% APY
Popular Direct recently raised the rate on its 5-year Popular Direct CD to 3.50% APY. Since the beginning of the year, there have been six rate increases, adding a total of 110 bps to the APY. The 5-year Popular Direct CD can be opened with a minimum $10k deposit and there is no stated balance cap.
Popular Direct has other competitive CDs. For a full list, please refer to our Popular Direct CD rate table.
Popular Direct’s harsh Early Withdrawal Penalty (EWP) has drawn criticism from some DA readers. As stated on the CD Disclosure page, the EWP reads as follows:
For terms equal to or greater than 60 months, the fee is 730 days simple interest.
Another negative aspect to the EWP is that it also applies to credited interest. According to the CD Disclosure:
Withdrawals of either credited interest and/or principal
prior to maturity will result in early withdrawal penalties.
The CD Disclosure page also states that interest is compounded daily and credited on the last day of the month. The automatic renewal grace period is 10 calendar days following the maturity date.
Funding a Popular Direct CD must done through an external account from another U.S. financial institution that has been “validated through the External Account function in Popular Direct Online Banking.” After linking the external account, you may not change it for 60 days. Each time you change the external account, it cannot be changed for another 60 calendar days.
Plus Savings Account
In May, Popular Direct brought back its Plus Savings Account (1.85% APY), as a replacement for the Exclusive Savings account, which had been added to the product line only five months earlier. Popular Direct likes to phase out established savings accounts to make way for new products. In the past two years, five savings accounts have been retired and replaced. With two rates increases in the past four months, the Plus Savings Account now earns 2.10% APY on balances of $5k+.
According to the Account Disclosure, the Plus Savings Account is structured exactly like its predecessor, but with a new name and new rate.
60-Day Freeze
I discussed this unpopular freeze in greater detail in a July blog post. The policy, which can be viewed by hovering your mouse over the “Apply Now” button, reads as follows:
Your security is important to us. That’s why, as of March 15, 2018, there will be a 60-day freeze on withdrawals for new accounts, starting with the date of account opening. Please note, your account will continue to earn interest during this time. Once the 60-day authorization period is complete, you may withdraw funds as needed.
ACH Transfers
On a more positive note, a colleague found it was very easy to initiate external transfers using their external transfer service, and the transfer limits are very high - up to $999,999 per day. The transfer service isn't available on their mobile app. He also mentioned that Popular Direct’s overall health was better than he imagined, with quite a bit of liquidity from insurance and FEMA payments to cover damage for last year’s hurricanes.
Availability
As an online division of Banco Popular North American, Popular Direct’s website states,
All Popular Direct deposit products are offered by, and will be opened through, Banco Popular North America (BPNA). BPNA is a Member FDIC institution and a New York state chartered bank.
Opening any type of account, including the 5-year Popular Direct CD, must be done online.
Bank Overview
Popular Direct/BPNA has an overall health grade of "A" at DepositAccounts.com, with a Texas Ratio of 7.80% (excellent) based on June 30, 2018 data. In the past year, the Bank has increased its total non-brokered deposits by $629.45 million, an excellent annual growth rate of 10.48%. Please refer to our financial overview of Popular Direct/BPNA (FDIC Certificate # 34967) for more details.
BPNA was also the holding institution for the now defunct internet bank E-LOAN; on May 15, 2017, all E-LOAN deposit products became Popular Direct products. BPNA is currently the 11th largest bank headquartered in New York, with assets in excess of $9.4 billion and more than 231,000 customer accounts.
How the CD Compares
When compared to 182 similar length-of-term CDs tracked by DepositAccounts.com that are available nationwide and require a minimum deposit of $10k or less, Popular Direct’s 5-year Popular Direct CD APY currently ranks second.
| Interest Rate | Length of Term | Credit Union/Bank |
|---|---|---|
| 3.51% APY | 60-Month Share Certificate ($1k min) | United States Senate Federal Credit Union |
| 3.50% APY | 5-Year Popular Direct CD ($10k min) | Popular Direct |
| 3.49% APY | 5-Year CD ($500 min) | KS StateBank |
When compare to only internet banks, the 5-year Popular Direct CD APY currently ranks first.
| Interest Rate | Length of Term | Credit Union/Bank |
|---|---|---|
| 3.50% APY | 5-Year Popular Direct CD ($10k min) | Popular Direct |
| 3.30% APY | 60-Month CD ($1k min) | First Internet Bank |
| 3.15% APY | 60-Month High Yield Online CD ($500 min) | Vio Bank |
The above rates are accurate as of 10/24/2018.
To search for the best CD rates, both nationwide and state specific, please refer to our CD rates table.
I am frustrated by the slowness of banks to incorporate the last rate rise into their CD and saving's rate. They sure like to string it along.
Whatever
The entire experience left a bad taste in my mouth.
The bottom line for me is after what Popular did to me and others, they are going to need to be WAY above market for me to even consider using them again.
The transfer is going to my linked Ally account. But they did it, not me. I am unclear if I could have done it all online without talking to a rep or not.
As mentioned, there was no early closure fee because the account had been open 6+ months.
If you are already down to $500, the potential lost interest for closing in mid month is only about 47 cents. Might not be worth waiting for for many.