4 Promising 5 Year Cds... Or Duds?

John Sears
John Sears   |     |   67 posts since 2015

The first is Kearney Bank.  Although it states 2.10% on DA, they offer a "Star" deal where you open a checking account and receive 2.25%.  I called, and the EWP is 6 mos.

3 others that I know nothing about in terms of EWP are:

Wallkill Valley 2.10%

Oritani Bank 2.10%

Lincoln 1st Bank 2.10%

These are all banks, not CUs.  I'll call these other 3 tomorrow and post what I learn.



Answers
Ken Tumin
Ken Tumin   |     |   6,031 posts since 2009
Those are top 5-year CDs for banks in the NYC metro area. You may find the blog post 2015 review of Lincoln 1st Bank's 5-year CD useful. When that blog post was published in July, the EWP was six months interest on the amount withdrawn.

For Kearney Bank, you can find both the regular rates and the StarBanking Plus rates at the DA Kearney Bank info page. It appears the StarBanking Plus rates require "direct deposit and a combined balance of $20,000 or more (seniors 55+ must have $10,000 or more) in your Star Checking primary account and any savings account." (see this Kearney Bank page).

The highest 5-year CD rate from a bank for the NYC metro area is at State Bank of India with a 2.27% APY. There are issues with these CDs such as a hefty 270-day EWP and the lack of POD accounts.

Hope this helps.
InterestYields
InterestYields   |     |   43 posts since 2010
https://www.depositaccounts.com/banks/kearny-bank.html#cd looks potentially interesting (https://www.kearnybank.com/Kearny-Bank-Personal-Rates.aspx#Certificate-Of-Deposit-Accounts), you know I'm fan Ken but why not have POD & EWP details listed under View Details of CD as well as under Overview / Commentary (i.e. with specific external links where available*)?  

I hope you'll consider adding such data that could drive deposit decisions :)

https://www.kearnybank.com/Site-Map.aspx does not seem to link to their Deposit Agreement/Terms which should be transparently available at all bank websites before actual deposits so this makes having such data available at http://depositaccounts.com even more useful.
InterestYields
InterestYields   |     |   43 posts since 2010
Any other updates on these (e.g. have you read their deposit terms)?  I just posted about Kearny Bank (among other germane matters:) at:  https://www.depositaccounts.com/community/ask/22210-1-invest-cds-alternatives.html#comment40284
John Sears
John Sears   |     |   67 posts since 2015
Bear in mind that you need a StarBanking Plus checking account to get the 2.25% rate.  If you're a Senior like I am, that means you'll be getting $200 less in interest as you need $10K in the checking account yielding .25%.  Otherwise, you need $20K which will lower your interest $400.  That's $2K over 5 years.

I wrote to Wallkill, it's local only with a 12 mo. EWP.

Oritani wrote me back, 6 mos. EWP.
InterestYields
InterestYields   |     |   43 posts since 2010
We should confirm this but was informed that "Combined balance of $20,000+ (seniors 55 and over must have $10,000+) in Star Checking Account and any savings account. Monthly direct deposit required" & the "5 Year CD StarBanking Plus" qualifies as a savings account (i.e. was told only the Star Checking Account was also required not another savings account) so you could have it all in the CD with a monthly deposit of $1 from an external bank into the Star Checking Account to qualify so you wouldn't miss out on that interest.

Other deposit terms issues however, excerpts below from my full post at : https://www.depositaccounts.com/community/ask/22210-1-invest-cds-alternatives.html#comment40284

Regarding Kearny Bank (currently offering 2.25% APY on a 5 Year CD StarBanking Plus account with a 180 day EWP allowing partial withdrawals*) with many branches in NJ & two in NY was contacted, currently accounts need to be opened in a branch but within months online account opening at kearnybank.com could happen.  

This 2.25% APY on a 5 Year CD StarBanking Plus account requires a "Star Banking Plus Checking with a combined balance of $20,000+ (seniors 55 and over must have $10,000+) in Star Checking Account and any savings account. Monthly direct deposit required" such as at least one monthly direct deposit from a CD interest disbursement of any amount from an external bank otherwise rate is 2.10% APY ($500 Minimum deposit to open).  

They could accommodate up to 6 POD beneficiaries (free trust for account extends FDIC coverage beyond 250K) but recommended that each POD beneficiary get their own POD account unless you have a lawyer/estate executor who the bank would work with because otherwise all listed POD beneficiaries sharing an account would have to go to a branch together after owner is deceased (not yet sure if/how that would change once kearnybank.com gets their online upgrades or if they could be like Ally Bank where I was told checks would be sent to listed POD beneficiaries upon receipt of death certificate).

There is some language in Kearny Bank's deposit terms agreement below of concern that we could discuss but we should also try to understand the bank perspective/rationale:

"Notice of Withdrawal.  
Withdrawals from a time account prior to maturity or prior to any notice period may be restricted and may be subject to penalty.  See your notice of penalty for early withdrawal. 

Early Withdrawal Penalties (and involuntary withdrawals).  
We may impose early withdrawal penalties on a withdrawal from a time account even if you don't initiate the withdrawal.  For instance, the early withdrawal penalty may be imposed if the withdrawal is caused by our set off against funds in the account or as a result of an attachment or other legal process.  We may close your account and impose the early withdrawal penalty on the entire account balance in the event of a partial early withdrawal.  See your notice of penalty for early withdrawals for additional information."

Post Financial Crisis bank lawyers began empowering their bank clients with restrictive language in the event of unexpected liquidity crises but it's been suggested that access to funds should remain unrestricted assuming no liquidity crises nor outstanding debts owed to the bank or legal-government actions.  They reserve the right to close CDs if early withdrawals become so frequent that CDs are being treated more like a checking account which sounds reasonable but in fairness I'd expect some warning letter before such a bank closure especially since Kearny Bank reserves the right to charge an EWP on not just what was withdrawn but the entire balance subject to an early closure.

Now that Ally Bank is down to 1.75% APY & Barclays is down to 2.05% on comparable 5 yr CDs, the extra 20-50 basis points may make Kearny Bank worth consideration for the depositor not too concerned about such deposit term language being acted on.

Full post at: https://www.depositaccounts.com/community/ask/22210-1-invest-cds-alternatives.html#comment40284

Let us know if you open an account/what you decide,
Rockefeller
Rockefeller   |     |   5 posts since 2015
Best deal out there right now is ebsbdirect.com.....4 year CD yielding 2.13%
John Sears
John Sears   |     |   67 posts since 2015
With a one year penalty fee, you come out a loser if you break it.
Rockefeller
Rockefeller   |     |   5 posts since 2015
It sounds like you should stick with online savings accounts.  Playing the EWPF game just gives CD investors a bad name by not honoring their end of the contract.  It's amateur finance management at best.
John Sears
John Sears   |     |   67 posts since 2015
That's odd, I thought I was reiterating what this site is basically all about LOL.


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