CIT Bank Gives Some CD Customers Option of Penalty-Free Early Withdrawal

A DA reader who has CIT Bank CDs forwarded me an email he received from CIT Bank. According to the email, they’re allowing him to move his long-term CDs into their High Yield Savings Account with no penalty. I’m not sure how many CIT Bank CD customers received this offer. It may be targeted to CD customers who have certain CDs that were opened when their rates were the highest. If you have CIT Bank CDs, make sure to keep an eye out for their emails, and please leave a comment if you received the same offer or if you didn’t receive this offer. Below is an excerpt of the email.

In today's world, change happens fast.

And as a valued customer, we don't want you to be stuck without access to your money because it's tied up in a CD.

So from now through December 23, 2016, we're offering you the opportunity to move your 3-, 4- or 5-year CD funds into a High Yield Savings Account (at 0.95% APY) – with no penalty.

It's the perfect solution. Take advantage of great rates, while gaining early access to your money.

Reason Behind CIT Bank’s Offer?

CIT Bank CD rates have fallen quite a bit in the last year.

CIT Bank’s Jumbo 5-year CD rate was as high as 2.40% APY in January 2015. It has slowly fallen since that time, and it’s now at 1.75% APY.

CIT Bank’s 4-year RampUp CD rate was as high as 1.90% APY in March 2015. It has fallen since that time, and it’s now at 1.38% APY.

If CIT Bank has many customers with these long-term CDs, CIT Bank can cut their interest expenses quite a bit by moving these deposits into a savings account that currently pays 0.95% APY, and of course, they are free to lower the savings account rate at any time.

CIT Bank has been in cost cutting mode. According to this Wall Street Journal article, CIT Group, the parent of CIT Bank, is “pushing hard to implement cost-cutting plans announced earlier this year.” Reducing the interest they pay on deposits is one way to cut costs. So we may see more moves by CIT Bank in the future to lower the deposit rates they pay. However, this may only be temporary. According to this recent American Banker article, the CIT Group CEO has “said its focus going forward will be gathering more retail deposits and increasing its lending to middle-market companies.” That will hopefully lead to higher deposit rates at CIT Bank.

Is CIT Bank’s Offer Worthwhile?

If you have received this offer and if you have one of those Jumbo 5-year CDs that pays 2.40% APY, you will probably see little value in this offer unless you are in need of that money. In terms of customer satisfaction, I don’t see anything wrong with this CIT Bank offer. There’s no obligation on customers to take this offer. It only gives customers more options which may be helpful for some customers. Another thing to consider is that CIT Bank’s long-term CDs do have hefty early withdrawal penalties. Terms of more than 3 years have an early withdrawal penalty of 12 months’ interest on the amount withdrawn.

CIT Bank’s 6-Month CD Offer

CIT Bank isn’t giving up on attracting deposits. That’s apparent from their latest deposit deal: $72 bonus for a 6-month CD with a minimum $25,000 deposit. With a current 6-month CD rate of 0.72% and a $25,000 deposit, a $72 bonus results in an effective rate of about 1.30%. There are no restrictions on the number of 6-Month CDs you may open. Please refer to CIT Bank’s promo page for more details. The offer is scheduled to end on November 30, 2016.

CIT Bank Overview

In 2015 CIT Bank merged with OneWest Bank. The new bank is now a national bank (National Association) with the name CIT Bank, N.A. OneWest Bank will remain, but it’s now a division of CIT Bank, N.A. Deposits at CIT Bank and OneWest will be counted together for purposes of determining FDIC insurance coverage limits. As of June 30, 2016, the combined bank now has assets of more than $43 billion and deposits of almost $33 billion.

The new bank (CIT Bank, N.A.) took the financial history and FDIC Certificate number of OneWest Bank (FDIC Certificate # 58978). CIT Bank, N.A. is currently financially strong. Based on June 30, 2016 data, it has an overall health grade at DepositAccounts.com of an “A+” with a Texas Ratio of 9.49% (excellent). Please refer to our financial overview of CIT Bank for more details.

CIT Bank started offering online CDs in 2011. It’s important not to 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.

OneWest Bank used to be IndyMac Bank. The FDIC completed the sale of IndyMac in March 2009 to new owners who renamed it OneWest. OneWest grew from acquisitions of failed banks. In December 2009, it acquired First Federal Bank of California and in February 2010, it acquired La Jolla Bank.