Dime Savings Bank increased the rate of its 7-year CD from 3.00% to 3.10% APY. The 5-year CD is also fairly competitive at 2.50% APY. Minimum deposit is $500. These rates are listed at Dimes deposit rates page as of 2/28/2011.
The big downside to Dime's long-term CDs is a harsh early withdrawal penalty. Here's what is stated in the disclosure:
Early Withdrawal Penalty – Principal may not be withdrawn from your Certificate before the account maturity date, unless the Bank consents to the withdrawal. If a withdrawal of principal is permitted, you may incur one of the following Bank penalties: [...] 5. Accounts with terms of 3 years or more will lose 24 month’s simple interest.
This rate is now the best that's available for a nationally available 7-year CD. The next best is the 3.00% APY 7-year CD that's available at Apple Federal Credit Union.
If you don't want to lock up your money this long, Dime is still offering a very competitive short-term CD special: a 1.65% APY 10-month CD. The downside is that it has several checking account requirements. Please see my Dime 10-month special CD review for more details. They also have a good 15-month IRA CD special.
Dime's CDs are available nationwide. Accounts can be opened online or by phone. If you don't open in a branch, they do require you to mail or fax copies of your driver's license and utility bill.
Branches are located throughout the Greater New York metro area.
Dime Savings Bank has an overall health score at DepositAccounts.com of 4 stars (out of 5) with a Texas Ratio of 7.31% (excellent) based on December 2010 data. Please refer to our financial overview of Dime Savings Bank for more details. The bank has been a FDIC member since 1943 (FDIC Certificate # 16012).
Future CD Rates?
In the last few weeks we've been seeing some better long-term CD rates and specials. Treasury yields have been rising over the last few months due to inflation expectations. There was some pull-back in last week, but the 10-year Treasury yields have been rising since October. This might be encouraging banks to offer some higher long-term CD rates.
With some rates rising and with the potential of a lot more rate hikes in the future, should one lock into a long-term CD? You might feel better keeping your cash liquid in a savings account, but if rates take a long time to rise, you're missing out on higher yields available in long-term CDs. There's no simple answer. In my post Strategy of Getting the Best Yields I reviewed issues to consider when you're shopping for CDs.
Searching for the Best CD Rates
To search for the best nationwide CD rates and the best CD rates in your state, please refer to the CD rates section of DepositAccounts.com.