New Internet Bank with Competitive Rates: Colorado Federal Savings Bank - Available Nationwide
Update 10/01/2010: The savings account rate has fallen to 1.25% APY
Colorado Federal Savings Bank has recently started advertising its online CDs and a savings account. According to the CSR, they've been offering these nationwide since January of this year, but they haven't been actively promoting them until about 3 weeks ago. The rates are not great, so I haven't been in a hurry to post. Nevertheless, the rates are competitive so I thought it's worthwhile to review the bank.
Some of the important features of the online savings account based on the bank's savings account page and from an email I received from the bank include:
- 1.70% APY on balances over $2,500 (0% for under $2,500) as of 11/13/09
- No monthly maintenance fees
- Initial funding done via an ACH transfer
- ACH transfers are free
- Only one external account can be linked (CSR)
- No daily ACH transfer limit amount (CSR)
- Typical limit of 6 ACH withdrawals per month
The most competitive CD rates as of 11/13/09 include the 12-month CD with a 2.00% APY and 2-year CD with a 2.25% APY. Terms range from 6 months to 5 years. Some important CD features based on the bank's CD page and from an email I received from the bank include:
- $5,000 minimum deposit
- CDs funded via ACH transfer
- CD rate locks on the day you apply online (CSR). Note, this conflicts a little with the first page of the application.
- Accrued interest can be transferred via ACH back to the funding account. The customer must initiate the transfer via the online interface (CSR)
- Early Withdrawal Penalty is 3 months penalty on term is one year or less and 6 months penalty for a term over one year
- Grace period at maturity is 10 days (CSR)
- At maturity, you can provide closing instructions via the bank's secure email
- Reverse ACH can be done to receive the funds at maturity
Some features common to all accounts include:
- No hard credit inquiry. They only do a soft credit inquiry (CSR)
- Beneficiaries cannot be included (CSR)
- Must be a U.S. Citizen or resident alien
It's a Small Bank - Does it Matter?
It's a small bank with only $135 million in assets and $105 million in deposits according to 6/30/09 FDIC data. Thus, it may not take them long to meet their deposit goals and to lower rates. However, other small bank that have offered nationwide savings accounts and CDs have remained competitive for over a year.
One example of a small bank staying competitive with a nationwide account is Citizens National Bank that has offered a very competitive savings account at CNB Bank Direct for over a year (see review). Last year it had only $482 million in assets.
Another example is Century Bank of Kentucky which has offered online savings accounts and CDs at Century Bank Direct since 2007. Its rates have often been very competitive. In fact, its current CD rates are some of the best in the nation (see post). Century Bank only has $100 million in deposits as of 6/30/09.
Financial and FDIC Info
Colorado Federal Savings Bank's ratings for safety and soundness are fair: 3 stars (adequate) at BauerFinancial and 4 stars (sound) at Bankrate.com. Both ratings are based on 6/30/09 financial data. The bank has been a FDIC member since 1990 (FDIC Certificate # 33111).
Other Competitive Savings Account and CD Rates
- My weekly list of the best savings account rates
- My weekly list of hot nationwide and local CD deals
- My weekly list of all nationwide CD deals
- Index of state CD and bank deals
Savings Account Rate History:
- 10/01/10: 1.25% APY
- 05/01/10: 1.30% APY
- 04/01/10: 1.35% APY
- 02/18/10: 1.40% APY
- 02/13/10: 1.50% APY
- 11/13/09: 1.70% APY
It looks like you can only have one one-time transfer pending at a time for each externally-linked account. The web page for making transfers doesn't explain this. So when I tried to add a second transfer, it overrode the pending new account funding transfer with a smaller amount, below the $2500 minimum.
I don't see anything in the terms that says you get no interest if your balance is below $2500, as mentioned in this review. We'll see what actually happens as a result of the low balance until my next transfer goes through.