Salem Five Direct Unveils Competitive 12-Month eCD Special

Massachusetts-based Salem Five Direct has introduced five “promotional Certificate of Deposits with very competitive rates.” While calling the rates “very competitive” is a bit of puffery for four of the CD Specials (with APYs ranging from 3.50% to 5.00%), the 12-month eCD Special 5.55% APY is definitely competitive. (Salem Five Direct currently has the highest 1-year CD rate offered by an internet bank.) The opening deposit requires at least $10k and is capped at $500k. According to CSR, these are limited-time offerings, but no end-date has been specified. In other words, it will be available until it's not.

Early Withdrawal Penalty

As stated in the CD Specials Account Disclosure, the Early Withdrawal Penalty (EWP) reads as follows (emphasis is mine):

You may make withdrawals of principal from your account before maturity only IF we agree at the time you request the withdrawal. If you withdraw principal before the maturity date, a penalty equal to 4% of the principal balance withdrawn will be charged to your account.

If the amount of the penalty exceeds the amount of earned interest that has not already been paid to you, we may have to deduct some of the penalty from your principal.

The two take-aways from the EWP disclosure are an early withdrawal is not guaranteed and the principal is not protected.

Availability and Account Opening

Salem Five Direct opened its virtual doors about 17 years ago. As an online division of Massachusetts-based Salem Five, Salem Five Direct offers its product line on a nationwide basis to U.S. citizens and permanent resident aliens (18 years or older) who have valid a Social Security number.

As an internet bank, Salem Five Direct has no brick-and-mortar branches. Opening any type of account, including a 12-month eCD Special can only be done online.

Funding and Other Details

The following information is from the Account Disclosure page and a Live Chat with CSR.

• Funding – ACH, check, or internal transfer.
• Ownership – Individual or joint.
• Interest – Compounded/credited monthly and can be transferred to another account or sent out as a check. (Must be requested in writing by either letter or online banking secured message.)
• Maturing Funds – ACH, wire transfer ($25 fee), cashier’s check to address on file, or internal transfer.
• Beneficiaries – Only one beneficiary can be designated, with Social Security number required.
• Grace Period – 10 calendar days before automatic renewal as an 12-month eCD.
• Credit Check – “Salem Five reserves the right to do a soft or hard pull when applying for an account at our discretion. For security purposes, we are unable to disclose which credit reference or reporting agency(ies) that are used by the bank.”

Bank Overview

As an online division of Salem Five, Salem Five Direct operates under Salem Five’s FDIC Certificate and shares its financial history.

Salem Five Direct/Salem Five has an overall health grade of "A+" at DepositAccounts.com, with a Texas Ratio of 2.78% (excellent) based on September 30, 2023 data. In the past year, the Bank has increased its total non-brokered deposits by $258.69 million, an excellent annual growth rate of 5.37%. Please refer to our financial overview of Salem Five Direct/Salem Five (FDIC Certificate # 23296) for more details.

Established in 1855, Salem Five Cents Savings Bank was known as the "Nickel Bank," because the first day’s deposits ranged from five cents and up. Headquartered in Salem, Massachusetts, the Bank has always considered itself innovative, and in 2015 added the Cardless Cash ATM, which allows customers to “open the bank’s mobile app on their smartphone, put in the amount they want withdrawn, then visit an ATM, scan a QR code, and pick up their money.”

Between 2013-2018, Salem Five Bancorp (parent company of Salem Five) completed the acquisitions of three Massachusetts banks: Stoneham Savings Bank (2013), Georgetown Bank (2017), and Sage Bank (2018). Salem Five is currently the fifth largest bank in Massachusetts, with assets in excess of $7.1 billion and more than 182,000 customer accounts.

How the 12-Month eCD Special 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 bank and two credit unions have higher rates than currently offered on the Salem Five Direct 12-month eCD Special. The following table compares the 12-month eCD Special 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 2/2/2024.

To look for the best CD rates, both nationwide and state specific, please refer to our Best CD Rates Table page.