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Fed Meeting Preview and Deposit Rate Forecast - Oct 25, 2023Best Deal for CDs Is Now at GE Capital Retail Bank
GE Capital Retail Bank (GECRB) had another rate increase on its 5-year CD and IRA CD. Its "mini Jumbo" 5-year CD APY was increased from 2.25% to 2.30%.This require a $25,000 minimum deposit. The rate is 5 basis points lower for a $2,000 minimum deposit. This is now the highest 5-year CD rate for a $25K deposit that’s available nationwide. CIT Bank is also offering a 2.30% APY but this requires a $100K minimum deposit.
Early Withdrawals for CDs and IRA CDs
The bank’s CD early withdrawal penalties are fair. According to the bank’s account agreement (see disclosures link at the bottom left of the bank’s home page):
For a CD with a term of twelve months or less, the penalty will be an amount equal to 90 days simple interest on the amount withdrawn at the current rate. For a CD with a term of more than twelve months, the penalty will be an amount equal to 180 days simple interest on the amount withdrawn at the current rate.
This makes the 5-year CD an excellent deal even if you prefer short-term CDs. You can see the effective yields when this 5-year CD is closed early using our CD early withdrawal penalty calculator (I’ve already pre-filled the GECRB 5-year CD into the calculator).
Another important thing to note in this account agreement is the early withdrawal penalties for IRAs. According to the account agreement (I highlighted the important part):
An early withdrawal, without penalty, is allowed only in the event of (a) ….. (b) ….. or (c ) when the account is an IRA and the owner dies, becomes permanently disabled or reaches the age of 59½; or (d) within the grace period.
Earlier this year I called the bank to confirm this and to see if they have any restrictions on this. According to an IRA specialist, they will allow an IRA customer who’s over the 59 ½ to close an IRA CD without penalty and open a new IRA CD with a higher rate.
Other Things to Consider
In my conversation with the IRA specialist, I was told that CDs can be funded with an ACH transfer, and the maximum amount is $500,000.
They do allow POD account beneficiaries for both regular and IRA accounts. I was told their standard form allows for a maximum of four beneficiaries, and the beneficiaries can be both persons and organizations (like charities). You can also open an account in the name of a trust.
New Competitive Savings Account
Earlier this year GECRB made its savings account competitive. It’s called Optimizer+plus High Yield Savings, and it has a rate of 0.95% for all balances (as of 4/29/2014). One potential gotcha that I see is a $5 monthly fee if the balance falls below $50. Another downside is a small ACH transfer limit. I was told by the bank CSR that the maximum transfer limit is $50,000.
Update: I just called to verify if this limit is up-to-date. I was told that there is a limit of $50,000 per transfer. However, I was told there is no daily or monthly limit. Also, there's no dollar limit if the ACH transfer is initiated from another bank. Of course, withdrawals are limited to 6 per month based on federal regulation.
Update 4/30/14: I just received a reply via GECRB's secure message. This time they said the limit is $100,000. Here's an excerpt from the message:
There is no dollar daily or monthly limit. There is a limit of $100,000 per ACH transfer entered online. If you wish to transfer more than that amount you would need to enter multiple transfers or call a Banking Representative. This is for both incoming and outgoing transfers.
ID Theft Resolution Service
The bank still offers a free identity theft resolution service for its deposit customers. Here’s how the bank describes its service:
GE Capital Retail Bank provides deposit account holders with complimentary Identity Theft Resolution Services through Identity Theft 911® just for banking with us. If you are ever a victim of Identity Theft, you'll have the assistance you need to help you get your life back to normal as quickly and easily as possible.
For more details refer to the bank’s "Secure Banking" page. The link to this page is under the "Resource Center" on the bank’s top menu.
Bank Overview
In January 2013 MetLife officially became GE Capital Retail Bank. As I mentioned in 2013, the products remained the same including the CDs, IRAs and money market accounts.
GE Capital Retail Bank’s main office is located in Draper, Utah. The bank has been around for awhile. It was established with FDIC insurance in 1988. However, it has not been in the retail deposit-taking business before the MetLife Bank acquisition. Its business focus has been on providing customized credit programs to retailers and consumers.
The bank has an overall health grade at DepositAccounts.com of an A with a Texas ratio of 8.05% (excellent) based on December 2013 data. Please refer to our financial overview of GE Capital Retail Bank for more details.
GE Capital vs. GE Capital Retail
One thing that’s confusing is that there are two GE Capital banks. The former MetLife Bank is GE Capital Retail Bank which I described above. GE Capital Bank is the other bank. It started offering an online savings account and CDs in May 2013. These are two separate banks, but both are part of the General Electric Company. They have separate FDIC certificate numbers (27314 for GE Capital Retail bank and 33778 for GE Capital Bank), and deposits in these two banks should be treated separately from a FDIC deposit insurance point of view.
GE Capital Bank also offers competitive rates. These two banks appear to be competing with each other which seems strange since they’re under the same parent company. Nevertheless, this competition is good for us savers. I hope they don’t consolidate these two banks.
Other CD and IRA CD Rates
To search for the best nationwide rates and best rates in your state, please refer to the CD rates and IRA CD rates tables of DepositAccounts.com.
The savings rate is .95% (https://www.myoptimizerplus.com/banking/products/high-yield-saving/index.htm?UISCode=0000000), right?
In secure messaging just last week, I asked about the ACH limit. The answer I received from bank: "There is no daily dollar limit but there is a limit of $100,000 per transfer. For amounts more than that you will need to do multiple transfers." Might the $50K reference be dated?
I also rechecked about the ACH transfer limit. I was told by phone it's still $50K. However, it is per transfer and not per day. I updated that in the post. I also sent a secure email to double check. I'll update the post once I receive a reply. Thanks.
Those withdrawals (sometimes they're deposits) you mentioned are necessary to verify that the source account you indicate is yours. That part of the process does add a couple days, but, practically speaking, no more than if you were to send a check in the mail. Plus, it's safer, in my opinion. There's no worry of a lost check en route.
Upon establishing that source account for ACH, a few places will allow you later to do outbound ACHs with it. At maturity, that will make it easy and quick for you to retrieve funds, if you choose not to rollover.
Withdrawals and Early Withdrawal Penalty – An early withdrawal penalty will be imposed if you withdraw any funds in a CD before the maturity date. The early withdrawal penalty for a CD with a term of 12 months or less will be an amount equal to 90 days simple interest on the amount withdrawn at the current interest rate for the CD. The early withdrawal penalty for a CD with a term of more than 12 months but less than 48 months will be an amount equal to 180 days simple interest on the amount withdrawn at the current interest rate for the CD. The early withdrawal penalty for a CD with a term of 48 months or more will be an amount equal to 365 days simple interest on the amount withdrawn at the current interest rate for the CD. Depending on how early in the term and how much you withdraw, the early withdrawal penalty may be greater than the interest earned on the CD and may result in a reduction of principal. No penalty applies to the withdrawal of interest earned and credited during the current term of the CD.
An early withdrawal without penalty will generally be permitted in the following circumstances:• In the event of death or the adjudication of incompetence of an owner;• Within the Grace Period described below;• For IRA CD account holders, if the early withdrawal is made to satisfy an IRS-required minimum distribution; or• For IRAs established under 26 USC §408 and the money is paid within 7 days of establishment of the IRA (but we will assess a penalty equal to the simple interest earned on the amount withdrawn).