GiftsforBanking.com: Interesting, but not for Everyone

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There are a ton of ads floating across the internet offering you an “Ipad” bundle or a new Samsung flat screen TV if you open a new 2-year CD.

If you click on one of the advertisements, you will immediately be transported back to 1996 which was not only the last time gifts were routinely offered for opening a CD, but also appears to be the year that the website where you have landed was designed.

If you can navigate through the 1996-ness, you find an offer that is real and present and interesting, but not for everyone.  The two-year CD rate is 1.85% - which today is a very competitive 2-year online CD rate.  In some parts of the country, you will find better 2-year CD rates at local banks or local credit unions.   (Giftsforbanking is also offering three and four year rates on this product that are not competitive).

If you open a 2-year CD with over $100,000, you’ll receive a coupon redeemable for any of several products such as a Trek bike, a 55-inch Samsung curved TV, a 12-inch MacBook, a tag Heuer Aquaracer watch, a Baume & Mercier watch, a Canon Eos camera or a DeLonghi expresso machine.  With only a $25,000 deposit, you can get a current third-generation Apple watch.   With a $50,000 deposit, you can get a number of other interesting products or packages, such as a Bose speaker.  Based on our research, it appears that you can get a gift or package of gifts that retails as high as $1,500 with a $100,000 deposit, and for those who are number crunchers, such a gift will gross up a CD return by 75 basis points annually.

GiftsforBanking is owned by Flushing Bank.  The bank was established in 1929 as the Flushing Savings Bank in the Borough of Queens, New York and renamed in 2010. With assets in excess of $6.2 billion, it is now one of New York State’s largest banks.  You can learn more about the bank here. Flushing Bank  owns IGoBanking and Bank Purely and this CD is opened through the IGoBanking website.  They permit more than one CD to be opened under this program which is also quite interesting, but, as with any bank, you should stay within FDIC-insurance limits.

The fine print on the GiftsforBanking website includes the following language:

“There is a substantial penalty for early withdrawals, including the value of the gift chosen. The value of all gifts will be considered as interest on your account for tax purposes in the first year the account is opened. A 1099-INT statement for the value of the gift (including applicable sales tax, shipping and handling costs) will be issued for the year of gift redemption.”     

When we contacted Flushing Bank, we learned that the penalty for early withdrawal is 6 months on the 2-year CD and that those redeeming can expect a 1099-INT for “more than” $575 for a $25,000 deposit, $1100 for a $50,000 deposit and $1700 for a $100,000 deposit.

With the receipt of the 1099-INT, you will be responsible for reporting and paying tax at your ordinary tax rate in the year in which you open the account.  Should you need to terminate the CD early, you’ll also be out the bank’s 6-month early withdrawal penalty as well as the amount reported under the 1099-INT.

This offer therefore only makes sense if you are entirely certain that you will not need or want your principal back before maturity and that the product you are receiving as a gift is one that you would definitely want to purchase anyway.   But, if your goal is simply to be rewarded for your banking activity, we prefer opening a new travel rewards credit card where you can get more value without locking up your capital and receiving a tax liability.  


EverBank Returns to Its Earlier Monkey Business Following TIAA Acquisition

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EverBank today launched a 3-year MarketSafe Emerging Currency CD.  I could write ad nauseum here about how inappropriate this investment is for most unsuspecting investors.  I could write about why it shouldn’t be called a Certificate of Deposit.  I could write about how I believe that EverBank is violating the 1933 SEC Act.  But, wait a minute.  I already did.  This product is exactly the same as a product that EverBank offered in 2014 and that I wrote about extensively then (see my article here), except that they have replaced one dictatorship’s currency for another (swapping out the Russian ruble for the Turkish lira) and decided that Indonesia’s rupiah is more attractive than South Africa’s rand. The Chinese renminbi, the Indian rupee and the Brazilian real, however, remain constants in this product.  The other things that remain a constant is that neither the people offering it nor those buying it have any idea what they are doing, and those buying it will not see any appreciation on their investment.

As a general proposition, this is the wrong time in the cycle to be playing with emerging markets, although some countries have unique circumstances that will enable them to outperform (perhaps Argentina).  If you must invest, the play is to invest in those countries or in U.S. or European denominated debt through a fund offered by a big fund family that knows what they are doing in emerging markets (maybe Ashmore).  And, if you insist on investing in currencies, the major investment banks offer structured products geared to lever appreciation in U.S. dollar terms should another currency (a single currency) appreciate against it.    Under any circumstance, avoid this EverBank product.

The best 3-year CD rates are listed here.


Three Years Ago, A 5-Year CD Made a Lot of Sense at 2.35%; Now Maybe Not

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Three years ago, the best online 5-year CDs were at or around 2.30% - 2.35%.  At the time, I put a fair amount of my personal money in 5-Year CDs, and I recommended that readers of BestCashCow to continue doing the same. 

I obviously regret not having put the money in Facebook or Netflix or Amazon!  But, these CDs have given me safety for savings accounts and a return on cash well above that offered by any savings accounts for the last three years.  To boot, at no time in the interim has it been possible to buy a 5-year CD at that rate.  (In early 2016, the best 5-year CD rates briefly reached 2.25%, but for most of the last year-and-a-half, 5-year rates were below 2%).

Now, the best 5-year rates are back to 2.35%.  Synchrony and Sallie Mae are both established online banks offering this rate and it seems tantalizing in light of where rates have been. 

But, savings rates are normalizing quickly (see the best rates here).    2-year CD rates and 3-year CD rates offer returns close to the 5-year CD without the time commitment.  I would be inclined to hold on the 5-year and stay in savings for now.   Given the Fed’s continued tendency to raise interest rates over the next 12 to 15 months, I think we may see 5-year CD rates above 3% before Janet Yellin hands over the reigns of the Fed to Gary Cohn.  In fact, the Federal Reserve continues to guide towards a Fed Funds rate at or above 3% in 2019 in which case savings rates and short-term CD rates will be at that level in less than 2 years.

Many other commentators will argue that you should jump on the 5-year CD at this point and pay the early withdrawal fee in a year if rates go up.  We aren’t inclined to recommend this strategy here either.  While Synchrony has an early withdrawal penalty of only 1-year’s interest and Sallie’s is 6-month’s interest, it is important to note generally that banks retain the right to refuse to allow early withdrawals (https://www.bestcashcow.com/can-you-always-withdraw-your-money-early-from-a-cd.html).   Therefore, BestCashCow would not recommend general investment or savings strategies relying on early withdrawals from CDs.

Before investing in any CD, we highly recommend that you read our 65 questions to ask which is also available to download as an E-Book by clicking on the right column.  

We also always recommend that you check rates at local banks and local credit unions before locking into online CDs; institiutions near you may offer better rates! 


2.78% APY 4-Year CD vs. 2.78% APY 5-Year CD?

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2.78% APY is an excellent rate on a 4-year CD.   It is also an excellent rate on a 5-year CD.  The 2.78% number is actually much higher than we have seen on a CD of that length in years, and higher than any nationally offered rate.

Community Trust Bank is offering the 2.78% APY rate on both the 4-year and the 5-year product at 6 of its branches in the Lexington, KY market.  If you are lucky enough to live in that market, you have the opportunity to get into a rate that still is very hard to get in much of the rest of the country.

In fact, the rate is so much higher than those offered nationally, if I lived there I might just choose to opt for the 5-year product over the 4-year one, and be assured of locking into an extra year of interest at the 2.78% rate.

Community Trust is offering these products only at its 6 branches in Lexington, Kentucky - its Beaumont branch, its Hamburg branch, its Leestown branchits Pasadena branch, its Richmond branch and its Vine Street branch.  The rate requires a $1,000 minimum deposit and proof of residency in Fayette County.

You may be able to get a 4-year CD rate or a 5-year CD rate like this at a bank where you live!  Check the best local 4-year CDs here.   Check the best local 5-year CDs here.

Also see the best online 4-year CD rates here and the best 5-year CD rates here.  


Two Months Ago I Bought A 1-Year CD Paying 1.35%; It Was a Mistake

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Less than two months ago, I locked into a 1-year CD paying 1.35%.   It was the best rate at the time and I really am unlikely to need the cash for the next 12 months (now 10 months).  Nonetheless, I know now that I locked in too low.

The best nationally offered one-year CD rates are now paying close to 1.50%.   One-year CD rates offered by banks or credit unions in your local area or state may even be paying higher.  And, Ally Bank is offering an 11-month No Penalty CD that pays 1.50% on balances over $25,000.  The Ally product gives depositors a much better rate than I am receiving and the ability to break the CD without an early withdrawal penalty. 

But, I am not even so sure that I should have locked into a one-year CD at all.  Savings rates are moving up quickly now with plenty of national offerings at 1.30%.  Again, local rates at banks and credit unions that may be available to you may be even higher.

Since I might need the cash to take advantage of the stock market crash that may come when impeachment proceedings begin in the fall, I certainly now wish I had just foregone locking into a gain over cash of what now looks at best to be just a couple of dollars.

Did you know that at some banks it may not even be possible to redeem your CD early, even with the payment of early termination fees?    

Before getting a CD read our 65 Questions to Ask before Choosing a CD which is also available as a e-book by clicking in the right column. 


EBSB Direct Is Offering A 19-Month CD at 1.61%

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Earlier today, EBSB Direct began offering a 19-month CD a 1.61%.  This rate is nationally offered and requires only a $1,000 minimum.

At the time of this writing, this rate is higher than any nationally offered 18-month CD and as high as all but the 5 highest nationally offered 2 year CD rates.   This offer is therefore compellingly priced on a national level.   Of course, there may be higher rates offered in certain markets and you will want to review local rates for 18-month CD rates here and for 2-year CD rates here to see rates in your market before locking in.

Please note that BestCashCow sees short CDs as somwhat compelling now.  However, after the recent Fed move, we think some level of caution is warranted right now around all CD products. Savings rates are rising now, and you run the risk of locking into something that will be offering less than the best savings rates in a matter of months. 

EBSB Direct is a subsidiary of East Boston Savings Bank.  You can learn more about the online bank here, and its parent here.

More information on this and other special-rate CDs can be found here.