Another 5-Year CD Rate Hike at Barclays

Barclays raised its rates again on its 4-year and 5-year CD rates. It has joined the 2% club. Its 5-year CD yield increased by 10 basis points to 2.00%. Its 4-year CD rate also increased by 10 basis points. Its yield is now 1.65%. It was just over a month ago when Barclays first bumped up these long-term CD rates. Just like before, all the shorter-term CD rates and the savings account rate held steady. These rates are accurate as of 10/03/2013. Thanks to DA member cumulus for mentioning this news in the forum.

Barclays’ long-term CDs used to be great deals due to a small early withdrawal penalty (EWP). That changed in March when the EWP went up from 90 days of interest to 180 days for terms over 24 months. However, the 180-day EWP for long-term CDs is still reasonable. Also, it should be noted that this new EWP was NOT retroactive. It did not affect existing CDs.

Not all CD changes have been negative. One is a policy change regarding interest disbursement. When Barclays first started offering online CDs, it did not allow interest disbursement. Now you can receive an interest disbursement from your CD on a monthly basis. You have the option to keep interest in your CD account or transfer it to another account (either the Barclays savings account or a verified external account).

One downside with Barclays is that they do not offer IRA CDs.

When I opened a Barclays CD, the application process was simple and smooth. One of the nice features of the application is the ability to designate beneficiaries which will make an account a Payable on Death (POD) account. No social security number was required for the beneficiaries. Another nice feature of the application process was the funding. I chose an ACH transfer to fund the CD, and it went smoothly. They use a trial deposit system to verify the external account. Two small deposits will be made to the external account. No withdrawals are done. External account can be a checking or savings account. You also have the option to mail in a check to fund the CD.

Barclays Online Savings Account

Barclays also has a good deal on its online savings account. It has a competitive rate of 0.90%. Since the savings account was launched in March 2012, there has been only one rate cut. That happened on May 16, 2013 when the yield went down from 1.00% to 0.90%. The online savings account has several nice features such as no minimum balance requirement and no monthly fees. Barclays also has a nice ACH transfer system. I have more details on its ACH system in this blog post.

Bank Overview

The Barclays internet bank is part of Barclays Bank Delaware which is a FDIC member (FDIC Certificate # 57203). The bank is best known in the U.S. for partnering with companies in offering co-branded credit cards. It's part of the U.S. division of Barclays, a British multinational megabank.

Barclays Bank Delaware has an overall health score at DepositAccounts.com of A+ with a Texas ratio of 4.40% (excellent) based on June 2013 data. Please refer to our financial overview of Barclays Bank Delaware for more details. The bank has been a FDIC member since 2001.

How the Barclays 5-Year CD Rate Compares

This rate hike wasn’t enough for Barclays to take the top spot for nationally available 5-year CDs. State Bank of India - New York just took the top spot with a 2.10% APY 5-year CD. You can get a 2.22% APY at Stanford FCU which is an all-access credit union, but this requires a checking account with direct deposit and a $100K minimum deposit. iGObanking.com used to be on top for banks, but its 5-year CD yield plummeted yesterday from 2.05% to 0.35%. The above rates are accurate as of 10/03/2013.

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.