For the entire month of March 2009, E-LOAN will waive its Early Withdrawal Penalty if you close your CD early. For many of our customers this could mean substantial savings in penalties normally associated with early account closure.
CD Term Early Withdrawal Penalty
1 year or less 3 months simple interest
More than 1 year 6 months simple interest
If you would like to continue maintaining your CD with us, please rest assured your funds are safe and will earn the regularly scheduled interest for the existing term. However, if you would like to access your money early, please adhere to the following two guidelines:
(1) In order to close your CD with no penalty you must log in to your account and send us a secure message asking us to close your account without penalty. Requests received by Wednesday each week will be processed by the following Friday. Funds will be received in your externally linked account the following week.
(2) Your account will be closed and funds returned to your externally linked account, which must still be open, valid and verified in order for the funds to be returned.
E-LOAN is not alone, Digital Credit Union is also waiving CD early withdrawal penalties. This is described at DCU's front page.
Both E-LOAN and DCU had offered high CD rates last year. It was just October 2008 when E-LOAN was offering a 5.25% APY 5-year CD. The 5-year CD rate is now only 2.90% APY as of 3/11/09. Also in October 2008 DCU was offering a special 4.50% APY 16-month CD. Currently, DCU doesn't have any CD specials, and its highest standard CD rate is only 1.90% APY.
Both institutions claim this is intended to help customers get access to their savings in this troubled economy. However, the institutions are likely trying to cut their costs from high yielding CDs. Deposits have flooded banks while loan demand has shrunk.
E-LOAN is not even making loans any more. This was described in this SEC Filing from Popular Inc in October 2008:
The restructuring plan of E-LOAN (the E-LOAN Restructuring Plan) contemplates E-LOAN ceasing to operate as a direct lender over the next few weeks. E-LOAN will continue to market deposit accounts under its name for the benefit of BPNA and offer loan customers the option of being referred to a trusted consumer lending partner.
If you go to E-LOAN's home page, you're now referred to other websites for loan applications. Savings accounts and CDs offered through E-LOAN are held by Banco Popular Bank which is part of Popular, Inc. Like many banks, Popular is having a difficult time.