EverBank has become very aggressive with their CD rates again - either because they are trying to be on the cutting edge of increasing yields or because they are eager to attract new capital ahead of TIAA’s overpriced acquisition.
EverBank’s 5-year CD rate is, in fact, already at 2.28% and that has caught our attention because we recently recommended that depositors categorically avoid CD laddering strategies – staying with only short maturities - until they see 5-year rates above 2.30%.
We recommend that depositors continue to exercise extreme caution here, especially with EverBank. EverBank’s early withdrawal fee, as stated in the bank’s terms and conditions, is one quarter the total amount of interest that would have been earned had the CD been held to maturity. A three-month early withdrawal fee on a one-year CD is quite reasonable; this is consistent with the fee charged by Sallie Mae or BAC Florida, two banks which aggressively compete in the 1-year term space. Giving up 15 months of interest to terminate a five-year CD early, however, is not market. It is excessive, exculpatory. Especially with longer term CDs, we also suggest caution as banks do retain the right to deny an early redemption request (and, in this regard, TIAA’s awful customer service history scares us greatly as well).
A good starting point for investing in CDs is by reading BestCashCow’s e-Book on 65 questions to ask before choosing a CD. Depositors then need to carefully read the bank’s terms and conditions before they invest. Some banks – like Everbank – may include wording that you will need to decipher.
With the case of EverBank, it is a lot like jumping into the pool at EverBank Field. The pictures of the pool look wonderful so long as they are take with four models when the stadium is empty. Once you have bought your ticket to the game, though, you will find it full of drunk guys and the water might not exactly be so healthy for you either.