It’s been a busy morning for short-term internet bank rates. I was in the process of writing about Live Oak Bank’s 1-year CD (2.80% APY) capturing the internet bank top spot, when VirtualBank swooped in and edged out Live Oak Bank by increasing the rate on its 12-month eCD to 2.81% APY. Since January, the 12-month eCD has had six rate increases, adding a total of 112 bps.
As I said before, watching the race to the top of the 1-year CD category is like watching the Tour de France: no one maintains the lead for long. VirtualBank has broken away from the 1-year CD peloton and is currently wearing the yellow jersey.
While not as competitive as the 12-month eCD, the 24-month eCD added 10 bps today. The new 3.06% APY is currently 14 bps lower than the top rate offered by Connexus Credit Union’s 24-month Certificate.
Since I last wrote about Virtual Bank, the Early Withdrawal Penalty has changed and now reads as follows:
Term is at least one year but less than two years: 1% of principal amount withdrawn.
Term is at least two years: 2% of principal amount withdrawn.
When VirtualBank introduced the one-year guaranteed 2.01% APY on its eMoney Market in May, it was a hot deal; now that rate is just "meh", even with the rate guarantee. This is a good example of the downside of money market/savings account promotions: a guarantee period isn’t that helpful when rates rise.
While the rate isn’t that special anymore, the eMoney Market account can serve as a holding place for maturing CD funds. As I discussed in my September blog post, issuing a check is VirtualBank’s default position. DA reader, itserich, posted this comment about withdrawing funds.
I contacted Virtual Bank and a representative told me normally a check by mail is the only way to receive proceeds of a matured CD. Which seems absurd.
I sent an email, but based on the phone call, it sounds like a request can be made through online banking to "cash out" a CD instead of allowing it to rollover into a new CD. And, I think a money market account, which requires a $100 balance to avoid a monthly fee, can also receive the proceeds of a matured CD. And then, hopefully, an ACH transfer could be initiated at an external bank.
When I spoke with CSR, I also told the “check in the mail” option. When I suggested itserich’s idea of transferring maturing funds to an existing VirtualBank eMoney Market, CSR agreed this was another way to access funds.
The eMoney Market account can be opened with a $100 minimum deposit and a minimum $100 balance is required to avoid the $5 monthly fee. There is no early termination fee listed, but “If you close your account before interest is credited you will not receive the accrued interest.”
Currently headquartered in Miami, VirtualBank became an internet division of Louisiana-based IBERIABANK in July 2017. According to the online application, you must be a U.S. citizen with a valid Social Security number to open an account at VirtualBank.
Opening any VirtualBank eCD must be done online. As stated on the online application,
Complete our online certificate of deposit application and provide certain information about yourself and any joint owner. To fund the eCD quickly and electronically, we will need your personal checking account number, bank name and routing number. You can choose to connect the eCD to any checking account, including one at VirtualBank.
Since being acquired by IBERIABANK, VirtualBank has added a PDF version of the eCD Account Application, which can be returned by snail mail.
As an internet division of IBERIABANK, Virtual Bank operates under IBERIABANK’s FDIC Certificate and shares its financial history.
VirtualBank/IBERIABANK has an overall health grade of "A+" at DepositAccounts.com, with a Texas Ratio of 3.68% (excellent), based on June 30, 2018 data. In the past year, the Bank has increased its total non-brokered deposits by $6.33 billion, an excellent annual growth rate of 38.5%. Please refer to our financial overview of VirtualBank/ IBERIABANK (FDIC Certificate # 28100) for more details.
VirtualBank was originally the internet branch of Lydian Private Bank. When Lydian failed in 2011, Sabadell United Bank assumed all deposits, as well as the VirtualBank division. On July 31, 2017, IBERIABANK Corporation finalized its acquisition of Sabadell United Bank, including VirtualBank.
IBERIABANK is currently Louisiana’s largest bank, with assets in excess of $30 billion and nearly 456,00 customer accounts. The 2017 acquisition of Sabadell United Bank expanded IBERIABANK’s presence in South Florida and increased its asset base by more than $5 billion.
How the eCD Compares
When compared to 217 similar length-of-term CDs tracked by DepositAccounts.com that are available nationally and require a minimum deposit of $10k or less, VirtualBank's 12-month eCD APY currently ranks second. When compared only to internet banks, the APY ranks first.
|Interest Rate||CD Length of Term||Credit Union/Bank|
|3.00% APY||12-Month CD ($1k min)||Greenwood Credit Union|
|2.81% APY||12-Month eCD ($10k min)||VirtualBank|
|2.80% APY||1-Year CD ($2.5k min)||Live Oak Bank|
The above rates are accurate as of 11/16/2018.
To look for the best CD rates, both nationwide and state specific, please refer to our CD Rates Table page.