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Retirement Savings: How Much Should I Save Each Month?Review of GMAC Bank and its 12-Month CD - Nationally Available
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ON BY Ken Tumin
Update 3/28/09: The CD rates have fallen. Please check the bank's website for the latest rates.
GMAC Bank continues to offer one of the best 12-month CD rates in the nation with a 2.95% APY. Typically, GMAC Bank changes rates on Fridays so this should last at least through next Thursday. This rate has actually crept up in the last two weeks. The rate fell from 3% to 2.85% APY in mid February, but after that, the rate has gone up by 5 basis points for the last two Fridays.
GMAC Bank's FAQ page does a pretty good job describing the CD details. Some things to note include:
Another important note is how CDs are opened at GMAC Bank. A reader in my previous post commented that GMAC Bank delayed opening the CD for two weeks and would not honor the rate that was listed at the time of the application. As mentioned above, the rate may not lock at the time of the application.
I've had good luck opening GMAC Bank CDs using funds in my GMAC Bank money market account. The online application gave me trouble on the last CD, but I was able to resolve the issue by phone. When one of my GMAC CDs matured in 2007, I was able to send them instructions to close the CD and transfer it back into the money market account via their online secure message system.
GMAC Bank does not offer IRA accounts, but they do allow custodial and other legally titled accounts. The online application instructs you to call for assistance for these. I don't think the online application allowed you to specify multiple POD beneficiaries, but you can send instructions to GMAC to add this to the account.
Like the CD rates, GMAC Bank has recently lowered its money market and savings account rates. But they remain competitive: 2.75% APY for the Online Savings Account and 2.15% APY for the Money Market Savings Account as of 3/03/2009. GMAC Bank continues to be my favorite online bank due to its ACH bank-to-bank transfer service (see my latest OSA review).
GMAC Bank's parent, GMAC Financial Services, has been hurt with big losses in both its mortgage and auto loan businesses. In late December, the Federal Reserve allowed them to become a bank holding company. GMAC then received $5 billion from the Treasury Department's bailout fund.
If the help that the Feds are providing doesn't allow GMAC to recover and GMAC still goes bankrupt, what happens to GMAC Bank? Refer to my recent GMAC's troubles post for more on this issue.
GMAC Bank accounts are FDIC insured (FDIC Certificate # 57803).
GMAC Bank continues to offer one of the best 12-month CD rates in the nation with a 2.95% APY. Typically, GMAC Bank changes rates on Fridays so this should last at least through next Thursday. This rate has actually crept up in the last two weeks. The rate fell from 3% to 2.85% APY in mid February, but after that, the rate has gone up by 5 basis points for the last two Fridays.
GMAC Bank's FAQ page does a pretty good job describing the CD details. Some things to note include:
- Minimum deposit is $500
- CD can be opened online or by phone
- CD can be funded by ACH electronic funds transfer or by check
- If funded by check, rate does not lock until check is received
- Early withdrawal penalty is 180 days of interest for terms over one year, 90 days of interest for shorter terms
- 10 day grace period at maturity in which you can close CD without penalties
- Interest can be posted monthly, quarterly, semi-annually or annually
The way they handle interest on the CDs is different than any other bank I've ever dealt with. The monthly statements show how much interest is earned for the month, but it's not credited to the account until the certificate matures. So the one year CDs that I opened with them in 2008 have no reportable interest for 2008. It will all be credited at their maturity in 2009.
Another important note is how CDs are opened at GMAC Bank. A reader in my previous post commented that GMAC Bank delayed opening the CD for two weeks and would not honor the rate that was listed at the time of the application. As mentioned above, the rate may not lock at the time of the application.
I've had good luck opening GMAC Bank CDs using funds in my GMAC Bank money market account. The online application gave me trouble on the last CD, but I was able to resolve the issue by phone. When one of my GMAC CDs matured in 2007, I was able to send them instructions to close the CD and transfer it back into the money market account via their online secure message system.
GMAC Bank does not offer IRA accounts, but they do allow custodial and other legally titled accounts. The online application instructs you to call for assistance for these. I don't think the online application allowed you to specify multiple POD beneficiaries, but you can send instructions to GMAC to add this to the account.
Like the CD rates, GMAC Bank has recently lowered its money market and savings account rates. But they remain competitive: 2.75% APY for the Online Savings Account and 2.15% APY for the Money Market Savings Account as of 3/03/2009. GMAC Bank continues to be my favorite online bank due to its ACH bank-to-bank transfer service (see my latest OSA review).
GMAC Bank's parent, GMAC Financial Services, has been hurt with big losses in both its mortgage and auto loan businesses. In late December, the Federal Reserve allowed them to become a bank holding company. GMAC then received $5 billion from the Treasury Department's bailout fund.
If the help that the Feds are providing doesn't allow GMAC to recover and GMAC still goes bankrupt, what happens to GMAC Bank? Refer to my recent GMAC's troubles post for more on this issue.
GMAC Bank accounts are FDIC insured (FDIC Certificate # 57803).
