AloStar Bank of Commerce is offering two special CDs with very competitive rates: a 1.25% APY 1-year CD and a 1.40% APY 2-year CD. Minimum deposit is $1,000, and the maximum opening deposit is $250,000. These rates are listed in the bank's promotions page as of 4/16/2012. Thanks to the reader cumulus who mentioned this deal on the discussion forum.
AloStar Bank of Commerce History
AloStar is offering these special CDs in celebration of its first anniversary. On April 15, 2011, Nexity Bank failed. The FDIC arranged for the newly-chartered Alostar Bank of Commerce to assume all of Nexity deposits. AloStar continued to operate like Nexity Bank as an internet bank with savings, money market accounts and CDs. Its savings account account rates have always been a little below average for internet banks.
Opening and Closing the CD
Their application process is not the best. They don't provide for ACH funding. If you don't have a savings or money market account at AloStar, the only two options to fund the CD are mailing a check or a wire transfer. The first FAQ provides these details. I was told by the CSR that you will receive an account number at the end of the online application. It takes 24 to 48 hours to be approved. The rate locks only at the time they receive the funds.
When the CD matures, they require written authorization to close the CD. This can be done by fax, email or mail. The two main options to receive the funds is a wire transfer ($20 fee) or a mailed check. The grace period at maturity is 10 calendar days.
CD Early Withdrawal Penalty
CD details are available online in the AloStar Truth-in-Savings disclosure. One nice feature is an early withdrawal penalty that is smaller than average:
If your account has an original maturity of one year or less: The fee we may impose will equal 30 days interest on the amount withdrawn subject to penalty. If your account has an original maturity of more than one year: The fee we may impose will equal 90 days interest on the amount withdrawn subject to penalty.
In the transaction limitation section, it states that early withdrawals are allowed with a penalty.
You may make withdrawals of principal from your account before maturity. Principal withdrawn before maturity is included in the amount subject to early withdrawal penalty.
On the downside, AloStar does state that early withdrawals may be restricted. This is stated in the "common features" section:
Withdrawals from a Certificate of Deposit, also known as a time account, prior to maturity or prior to any notice period may be restricted and may be subject to penalty.
As I described in March, some banks suggest in their disclosures that early withdrawals may not be allowed.
AloStar Bank of Commerce Overview
The bank has an overall health score at DepositAccounts.com of 3 stars (out of 5) with a Texas Ratio of 49.71% (below average) based on December 2011 data. Please refer to our financial overview of AloStar Bank of Commerce for more details. The bank is a FDIC member (FDIC Certificate # 59060).
How These CD Rates Compare
These two AloStar CD specials are rate leaders for nationally available 1-year and 2-year CDs. The second best 1-year CD rate is 1.15% APY at KeySource Commercial Bank and Doral Bank Direct. The second best 2-year CD rate is 1.36% APY at Melrose Credit Union. These rates are accurate as of 4/16/2012.
Searching for Top CD Rates
To search for nationwide CD rates and CD rates in your state, please refer to the best CD rates section of DepositAccounts.com.