Higher CD Rates at Barclays

Barclays increased the rates on its 5-year, 3-year and 2-year CDs. Most noteworthy is the new 5-year CD rate increase. The yield went up by 15 basis points to 2.15% APY. The 3-year and 2-year CD rates went up by 10 basis points to 1.35% APY and 1.15% APY. These rates are accurate as of 1/16/2014. The last rate bump at Barclays was in October. The new 5-year CD rate is still way below what PenFed is offering. Nevertheless, it does show a trend of higher long-term CD rates.

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 grade at DepositAccounts.com of A+ with a Texas ratio of 4.22% (excellent) based on September 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

Barclays’ new 5-year CD rate is still quite a bit below PenFed’s 3.04% APY. Nevertheless, Barclays’ 2.15% APY is very competitive when compared to other internet banks. The highest 5-year CD yield from a bank is currently 2.16% APY at EverBank. One downside with EverBank is a very harsh early withdrawal penalty. The above rates are accurate as of 1/16/2014.

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.