Everbank CD With Interesting Early Withdrawal Penalty

KevinM | Aug 8, 2013 | 26 posts since 2012

I just found out about the Everbank 5-year CD earning 2.06% APY. An interesting twist is that the early withdrawal penalty (EWP) is 1/4 of the interest you would have earned. For withdrawal after one year, this would be only about 0.5%, which is excellent. After two years, about 1%, which is competetive, and even after four years at 2% it's in line with many 5-year CDs.

Has anyone dug into the terms of this CD to see if there are any gotchas?

I seem to recall a very steep EWP of something like 15 months of interest on Everbank CDs in the past, so this is quite an improvement if I'm understanding it (and recalling it) correctly.

Ken, it would be interesting to see blog post with your thoughts about this CD. I looked and didn't find anything.

Kevin

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KevinM | Aug 8, 2013 | 26 posts since 2012

Found the Terms and Conditions on the Everbank site. Here is the early withdrawal penalty clause:

4.1.7.4. Early Withdrawal Penalties. We will impose an Early Withdrawal penalty on withdrawals made before the maturity date of the CD. This penalty will be equal to one-fourth of the total interest that would have been earned on the principal balance of the account if funds had not been withdrawn prior to the maturity date. Early Withdrawal penalties may be waived, at our discretion, in the event of death or legal incompetence of any of the Account Holders, as shown on our records.

Kevin

Ken Tumin | Aug 8, 2013 | 5,922 posts since 2009

I last reviewed EverBank's convoluted CD early withdrawal penalty when I reviewed its 2.06% apy 5-year CD. I interpreted the EWP to be 15 months of interest for the 60-month CD (one-fourth of the total interest that would have been earned on the principal balance of the account if funds had not been withdrawn prior to the maturity date). An EverBank CSR confirmed this, but I'm never 100% confident in what I'm told by a bank CSR.

KevinM | Aug 8, 2013 | 26 posts since 2012

OK Ken, thanks for the clarification. I misunderstood the terms to mean 1/4 of the interest that would have been earned as of the early withdrawal date. Very tricky! I must have remembered the 15 months of interest EWP from one of your posts, but forgotten about or not noticed the tricky wording in the T&Cs.

Kevin

ChasR | Aug 8, 2013 | 229 posts since 2013

The EverBank EWP language is not clearly written, but Ken is correct. I just received from the bank a written confirmation of the the terms of my 5-year CD. It says "Penalty is equal to simple interest of 456 days"--i.e., 15 months.