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Bump-Up Bank CDs: Compass vs. CapitalOne Part 2


The Bump-Up certificate of deposit rates from both Compass Bank and Capital One have improved a little since I last compared them back in November. Capital One's No Regrets CDs are still not a good deal. The rates have risen about 0.15%. The current rates for the 3, 4 and 5 year CDs are only 3.90%, 4.00% and 4.15% APY. Considering Capital One's High Yield Savings account is paying 4.00% APY, I don't see any advantage from these CDs. However, if you purchased one of these certificates a year or two ago, you might be hoping for increases so you can get a higher bump-up rate. If you have a 5-year CD, you'll have to keep waiting. Back in July 2004, the 60-month rate was 4.33% APY which is higher than today's 4.15% APY rate. However, for the shorter term CDs, there have been some increases.

The following is a summary of the Capital One's No Regrets CD rates:

Term July 04 Nov 05 Jan 06
36 months 3.30% 3.74% 3.90%
48 months 3.84% 3.86% 4.00%
60 months 4.33% 4.00% 4.15%

Compass Bank's Option CDs are still a much better deal than Capital One's No Regret CDs. For terms of 3-years and up, rates are about 0.70% higher and you get the option of an additional bump-up. If you have to give up a significant amount of interest to get the bump-up option, it's probably not worth it. However, the Compass fixed-rate CDs have rates that are only 0.05% higher than the corresponding Option CDs. Giving up 0.05% interest is probably worth the bump-up option. However, the rates of corresponding fixed-rate CDs at other banks are between 0.25% to 0.50% higher than these Option CD rates. That's too much of a premium for the bump-up option. Perhaps it would make sense if rates looked to be rising a lot this year. But based on the last Fed meeting, we might be seeing rates rise less than last year.

The following is a summary of Compass Bank's Option CD rates for Texas:

Term Sept 05 Nov 05 Jan 06
36 months 4.15% 4.60% 4.65%
48 months 4.20% 4.65% 4.70%
60 months 4.25% 4.70% 4.75%

These Option CDs have a minimum deposit requirement of $5K. Two rate bump-ups are allowed. Plus, two additional deposits are allowed, however, the amount of the deposit may not exceed the amount of your initial deposit. Compass Bank has branches in Alabama, Arizona, Colorado, Florida, New Mexico and Texas.
  |     |   Comment #1
I appreciate all your info. Very useful. Keep up the good work!!!!
Banking Guy
  |     |   Comment #2
Thanks for the feedback!
  |     |   Comment #3
Very interesting information. Thank you a lot. I would like my credit card had such low rates :)

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