CIT Bank Launches New RampUp CDs

CIT Bank has launched a new line of CDs that it calls RampUp CDs. There are two types of RampUp CDs. The first type is called RampUp Plus CDs, and they replace the Achiever CDs. Just like the Achiever CDs, they allow for a one-time CD rate increase and a one-time added deposit. Also, both have a minimum deposit of $25,000. The second type is called RampUp CDs, and these have a 3-year and 4-year term. They allow for a one-time CD rate increase, but they do not allow for an add-on deposit. The 3-year CD has a $25,000 minimum deposit, but the 4-year CD has a $50,000 minimum deposit. Thanks to DA member OldGuy for first posting on these new CDs in the forum.

According to the small print "CIT Bank reserves the right to limit the additional deposit to your RampUp Plus account to $250,000." So the add-on deposit should not be considered unlimited.

There’s also a limitation on the 3-year and 4-year RampUp CDs. These have a maximum deposit of $250,000.

The RampUp Plus CD rates are the same as the old Achiever CD rates. These continue to be a good deal. The 1-year CD has a 1.05% APY, and the 2-year CD has a 1.20% APY (as of 6/11/2014).

The RampUp CD rates are competitive even when compared to standard CDs without the bump-up feature. The 3-year CD has a 1.35% APY, and the 4-year CD has a 1.70% APY (as of 6/11/2014).

If you can handle the balance requirements, these are a better deal than Ally Bank’s Raise Your Rate CDs. Ally Bank’s 4-year Raise Your Rate CD has a 1.30% APY, and its 2-year Raise Your Rate CD has a 1.10% APY (as of 6/11/2014). Unlike the RampUp Plus CD, Ally’s CDs don’t allow for an add-on deposit. The only advantage with Ally Bank’s 4-year Raise Your Rate CD is that it allows for two rate bumps during the term instead of just one.

In theory, savers could benefit from a bump-up CD in a rising rate environment. If the CD rate increases, the customer can request a rate bump-up on their CD. The problem with these types of CDs is that it encourages savers to forgo a higher rate CD in exchange for this lower rate bump-up CD. Also, there’s no guarantee that the CD rate will go up. The bank can always keep the bump-up CD rate low.

At least in the case of CIT Bank, savers don’t have to give up too much if they choose the RampUp CD. CIT Bank’s Jumbo 4-year CD, which does not have the bump-up feature, has a 1.80% APY. That’s only 10 basis points higher than the 4-year RampUp CD. CIT Bank’s 4-year Term CD has a 1.65% APY which is 5 basis points lower than the 4-year RampUp CD. So if you have $50K that you want to deposit into a 4-year CD, the 4-year RampUp CD is clearly the best option as of 6/11/2014.

Other CDs and IRA CDs

CIT Bank continues to offer a good deal on its 5-year Jumbo and Term CDs. I reviewed these CDs in this blog post.

Application Process

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.

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 grade at DepositAccounts.com is an A+ with a Texas Ratio of 2.72% (excellent) based on March 2014 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).