CIT Bank first launched its internet bank offering CDs last October. The most noteworthy aspect of CIT Bank's CDs was its 1-year Achiever CD. It allows you to make one additional deposit of any size during the term. Also, it allows for one rate bump. If the Achiever CD rate goes up, you can take advantage of the higher rate.
CIT Bank just came out with another Achiever CD. It has a 2-year term and a 1.26% APY (as of 1/9/2012). Minimum deposit is $25,000. As you can see in our 2-year CD rate table, this rate is near the top for internet banks. Here's the link where you can apply for this CD.
CIT Bank still offers its 1-year Achiever CD, but the rate has fallen a little. It now has a 1.08% APY (as of 1/9/2012) with a $25,000 minimum deposit.
CIT Bank is currently only offering internet CDs with terms from 6 months to 3 years. The rates for most of these CDs went down by about 5 basis points. They're still competitive compared to the rates of other internet banks.
Benefits of the Add-On and Bump-Up Features
The add-on feature can be very useful when there's a chance that interest rates will continue to fall. You can lock in the 1-year or 2-year CD rate now, and you don't have to worry about lower rates. When your other CDs matures, you can make use of the add-on feature and deposit into these Achiever CDs with the original interest rate.
The usefulness of add-on CDs increases for longer CD terms. Here's an example of how the 2-year Achiever CD could be useful. Let's say you open this 2-year Achiever CD today, and you wait one year. If rates continue to fall, you might not even be able to get a 1-year CD with a yield over 1.00% in January 2013. However, with this 2-year Achiever CD, you can make one deposit of any size into the existing Achiever CD which has a 1.26% APY. The term stays the same, so it will be like you had opened a new 1-year CD with a 1.26% APY.
If rates happen to go up during the term, you can then use the rate bump feature. That will let you take advantage of the new higher Achiever CD yield.
CIT Bank CD Overview
Some of the important features of the CDs are described in CIT Bank's FAQ page. Here are a few of the important ones:
- Early withdrawal penalty is 3 months' interest for CD terms 1 year and less, 6 months' interest for CD terms from 1 year to 3 years, 12 months' interest for terms over 3 years.
- Grace period when the CD can be withdrawn without penalty is 10 days starting with the maturity date
- Posted interest on the CD can be withdrawn at any time
- Interest is compounded daily, and credited it to your account monthly
You can apply for CIT Bank CDs with an online application. It's available for people in any state. Funding is done with an electronic funds transfer from an outside bank account. As is typical with setting up an ACH transfer, you provide CIT Bank with the routing and account number of your outside account. You also have the option to mail in a check. I was told the rate locks at the time you complete your application.
You can specify multiple beneficiaries in the application. There are no beneficiary fields in the online application, but I was told you can make a note at bottom of the application in the "comments/additional information" box. Include the beneficiaries names, dates of birth and the percentages of the funds for them to receive.
CIT Bank Overview
Don't confuse CIT Bank with Citigroup Inc. which is the bank holding company of Citibank. CIT Bank is one of the businesses that make up CIT Group Inc., a bank holding company best known for providing commercial financing and other services to small and middle market businesses. CIT Group had some difficulties in 2009. However, the FDIC-insured CIT Bank is financially strong. That's the most important factor for depositors. The bank's overall health score at DepositAccounts.com is 5 stars (out of 5) with a Texas Ratio of 1.11% (excellent) based on September 2011 data. Bankrate also shows a strong bank with a 4-star rating based on September 2011 data. Please refer to our financial overview of CIT Bank for more details. The bank has been a FDIC member since 2000 (FDIC Certificate # 35575).
Edit 7/9/2012: Updated EWP to take into consideration new 5-year CDs