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Carolina First Bank

2.28% 23-Month Prime Rate Minus 1% CD at Carolina First Bank in SC, NC & FL


Carolina First Bank is offering a special called the "Watch it Grow Variable Rate CD." It's a 23-month variable rate CD with a 2.28% APY. The rate is guaranteed never to drop below 2.28% APY. However, it will go up when the Prime Rate increases. It's indexed to the the Prime Rate minus 1%. Minimum deposit is $2,500, and the maximum is $99,000. The CD requires that you also have a Carolina First checking, savings or money market account to receive the CD interest payments.

This CD isn't listed at the bank's website. There's an online ad of this CD here. I called this morning, and the CSR said that this CD is available at all of their branches in North and South Carolina. In addition, Mercantile Bank, which is a division of Carolina First Bank, is also offering this same CD, and it has branches throughout Florida. You may also be able to open accounts by mail. The CSR wasn't too clear on this, but it may be possible. If you're interested in opening this by mail, call their toll-free number at 800.476.6400.

The Prime Rate is currently 3.25%. It's typically equal to the Fed funds rate plus 3 percentage points. You can see the history of the rate here.

If you think the Fed will have to substantially hike rates over the next year, this CD could do well. If rates don't rise, you'll lose out a little compared to opening a top regular 2-year CD which currently have rates about 50 basis points over this. Carolina First is also listing a 3.00% APY 36-month CD in the ad that I mentioned above.

The bank's ratings for safety and soundness are a little weak: 3 stars (adequate) at BauerFinancial (based on 3/31/09 data) and 1 stars (lowest) at Bankrate.com (based on 12/31/08 data). The bank has been a FDIC member since 1986 (FDIC Certificate # 26849).

Thanks to the reader Tuphat who mentioned this special in the Daily News & Deals Page.

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