Update 10/19/08: The promotion is now 4.50% APY on a money market account with the rate guaranteed for 3 months.
Update 10/11/08: The yield has gone down to 4.50% APY.
Update 9/21/08: The term of the CD has been changed from 12 months to 6 months.
Dime Savings Bank is offering a CD promotion with a 5% APY and term of 12 months. A checking account with specific activity is required. The minimum deposit is $500, and the maximum is $100,000.
The required checking account, Prime Dime Checking, hurts this deal. There is a $15 monthly fee if the average daily balance falls below $5,000. Also required is either direct deposit of payroll, pension or government benefits that recurs on at least a monthly basis within 90 days of account opening or at least one online bill payment per month. If neither of these two conditions are met by the end of the initial 90 days, the yield of the CD falls to 3.75% APY. The checking account has an APY of 2.00% for balances between $5K to $25K, of 2.25% for balances between $25K and $50K and 3.00% for balances between $50K to $150K.
Since you're required to keep at least $5K to avoid a monthly fee, and you'll only earn 2% APY on this $5K, you'll need to have a large balance in the CD to make up for this. For example, a $5K checking account balance earning 2% APY and a $25K CD earning 5% APY are equivalent to a $30K deposit earning 4.50% APY. For a $90K CD, the combined yield would be 4.84% APY.
I called their toll-free number (1-800-321-3463) this afternoon, and I was told it's available to people in any state. It just started on Tuesday, so it should be around for a while. There's an online application, but the bank requires that you mail or fax a copy of a utility bill and a photo ID. The accounts can be funded by ACH transfer. The checking account will be funded first.
I last reported on this bank in December 2006 when it was offering a 6% 3-month money market promo. At that time I was told they only do a ChexSystem check and no hard credit pull during the application. A reader in that post reported that Dime will not allow POD Accounts.
Dime Savings Bank seems to have some solid financial ratings: 4 stars (excellent) at BauerFinancial and 4 stars (sound) at Bankrate.com. Both are based on 3/31/08 data. It has been FDIC insured since 1943 (FDIC Certificate # 16012). It's based in Brooklyn, New York, and it has $3.7 billion in assets.
Thanks to the reader who mentioned this CD in the finding deals post.