The 5.00% CD rate is back! Dime Direct is offering a promotional 6 month CD that yields 5.00%.  To qualify for this promo CD rate you will need to open a Prime Dime Checking Account. The offer is only available in New York, New Jersey and Connecticut.

The minimum opening deposit for the CD account is $500 and the maximum deposit is $100,000. Funds deposited in the account must be “new money” and can not be transferred from an existing Dime Account. Dime Direct is part of Dime Savings Bank of Williamsburgh ( Brooklyn ) New York which was establish in 1864.

The Prime Dime Checking Account can be opened with a minimum deposit of $1.00. There is a $15.00 monthly fee if your checking account balance falls below $5,000. To qualify for the CD rate you must also do the following transactions in the checking account.  Have a monthly recurring direct deposit of a payroll check, pension check or government benefit or use the online bill payment service at least once per month.

Dime Direct Bank 6 Month CD Rate Application

Brokerage certificate of deposits differ from traditional Bank CDs because they are offered by a broker (a middleman) not directly from a bank. Brokers can include investment banks and financial institutions like Charles Schwab or Fidelity. 

CD brokers usually purchase CDs in large denominations and resell them to customers in smaller amounts. Just like traditional certificate of deposits purchased from banks, brokerage certificate of deposits are FDIC insured for up to $250,000 for individual accounts and $500,000 for joint accounts.

The difference between traditional bank CDs and brokerage CDs is the brokerage CDs are tradable like stocks or bonds. Why would one want to trade a CD? To access their funds without paying an early withdrawal penalty like you would with bank CDs.  

A brokerage CD will return an investor’s principal at maturity, its value if sold prior to maturity will fluctuate based on size, time remaining before maturity and the level of interest rates. If you sell before maturity your broker will request bids and contact you with the highest bid for you CD. You will also receive any accrued interest up to the sale date.

Another benefit is a brokerage CD can be transferred from one brokerage firm to another, which allows the owner to consolidate assets at one firm.

Bloomberg recently reported CD rates are going up.

E-Loan is offering one of the best CD rates for a 1 year CD. The current annual percentage yield for the 1 year certificate of deposit is 4.36%. Plus if you sign up with promotional code “times25″ before December 18th you will receive a $25 bonus.

The bonus is posted into the account within 90 days of opening the account and you must keep the account until the certificate of deposit matures.

The minimum opening deposit is $10,000 and the promo is valid for one new 1 year CD account for each new customer.

E-Loan 1 Year Promotional CD Application

Dollar Savings Direct is offering a high yield savings account(HYCA) that currently yields 4.00% APY. The minimum balance you have to maintain to receive this HYSA rate is $1000. The account can be opened online at HYSA application.  Dollar Savings Direct is an online banking division of Emigrant Bank of New York. Emigrant Bank has been around since the 1920’s. As of December 31, 2007, Emigrant Bank and its affiliated Regional Banks have approximately $14.3 billion in assets and more than $1 billion in net worth, operating through 35 branches in the New York metropolitan area.

Requirements to open a savings account

• Be at least 18 years old
• Have a social security number
• A legal US address 
• A personal checking account in a US bank

If you need help opening an account call customer service at 1-866-395-8693

Dollar Savings Direct Online Savings Account Application

Sovereign Bank is offering a 9 month promotional CD Rate and a 12 month promotional CD rate. The 9 month certificate of deposit currently has a 4.00% annual percentage yield (APY) and the 12 month certificate of deposit currently has a 4.25% APY. The minimum deposit for both CDs is only $500.

You will need the following to open a certificate of deposit account with Sovereign Bank.

• Social Security number
• Current address and prior address(es) if you have lived at your current address for less than two years
• Driver’s license number
• Employment Information
• Email address

 Sovereign Bank CD Rate Application

The Federal Deposit Insurance Corporation recently raised insurance limits on all deposit accounts to help calm the credit and financial markets. The new limits are only temporary but the limits have been raised from $100,000 to $250,000 for individual accounts. Deposit accounts include checking accounts, savings accounts, money market deposit accounts and certificates of deposit (CDs). 

You can open multiple accounts to raise your overall limit. We have two examples on raising the insured limit on deposit accounts. 

Maximizing Your FDIC Insurance Coverage

A husband and wife can have deposit ac­counts totaling $1,500,000 insured by the FDIC, with the following account ownership strategy.

Example 1: Husband and Wife 

A husband and wife with a child can have de­posit accounts totaling $2,000,000 insured by the FDIC, with the following account owner­ship strategy.

Example 2: Husband and Wife with Child

In additon to using the multiple deposit account stragey you can also use the Certificate of Deposit Account Registry Service to insure your deposits up to $50 million. We recently wrote on artilce on the service, read more CDARS

Costco through Capital One Bank is offering an 18 months CD that currently has an annual percentage yield of 4.46% for both non-jumbo CDs and jumbo CDs. This promotional offer is one of the highest CD rates available for an 18 months CD and is only available to Costco members. The minimum deposit is $5,000.

There is an additional promo offer if you have not yet opened an account. Costco Executive Members will receive $60 and Gold Star and Business Members will receive $20 when they open their first account of any kind through the Costco program and deposit at least $5,000 within 30 days of opening the account. The bonus is credited to the new account balance and is reported as interest income.

A CD account can be opened online by using the link below or by calling 1-866-850-3919.

Captial One/Costco 18 Month CD Applicaiton

We often receive questions about investing terms and phrases so we decided to post definitions of some of the terms we use on monitorbankrates.com

What is principal?

Principal is the amount of money originally invested in an account. It includes any interest earned which has been posted to the account. Principal is the money that earns interest.

What is an Annual Percentage Rate (APR)?

The APR is the annual rate of interest without taking into account the compounding of interest.

What is an Annual Percentage Yield (APY)?

The APY is the annualized rate of return on your investment including compounding interest.

What is a Certificate of Deposit (CD)?

A certificate of deposit is a promissory note issued by a bank. It is a time deposit that restricts holders from withdrawing funds on demand. 

What is a Jumbo Certificate of Deposit (CD)?

A Jumbo certificate of deposit usually has a minimum principal deposit of $100,000.

What is an Early Withdrawal Penalty?

Since certificate of deposits are timed deposits withdrawing monies early will incur a penalty, forfeiting some or all of the interest earned. 

What is a Certificate of Deposit term?

The term of a certificate of deposit (CD) is the length of time your money has to be deposited to accrue the interest promised by the bank.

What is Compounding Interest?

Compounding refers to earning interest on previous interest earned, this is why the annual percentage yield (APY) is higher then the annual percentage rate (APR). 

Another good source for information on investing terms is Investopedia.com  

Valley National Bank of Wayne New Jersery is offering 4.00% APY on a 9 month CD, 1 year CD, 18 month CD and 2 year CD. These rates are as of October 23, 2008.  Valley National Bank has been around for over 80 years.  

Certificate of Deposit overview:

• Minimum initial deposit $500
• Early withdrawal penalty is 90 days interest for CD’s of less than one year, 180 days interest for CD’s of 1 to less than 3 years, 365 days interest for CD’s of 3 years or more
• 10 day grace period upon maturity; no interest paid during the grace period if CD is not renewed

Certificate of Deposit Application process:

To open a CD account with Valley National you can fill out the application online and bring it into a branch office. If you are an existing VNB customer you can mail the form in.  For more information go to www.valleynationalbank.com or call 1-800-522-4100

Bank of America is offering one of the best CD rates for 7 month CD, this promotional CD rate is currently 3.68% with an APY of 3.75%.  The rate is only available online at bankofamerica.com and is only for the initial term of a new CD. The minimum deposit to open a High Yield CD is $5,000 and B of A might limit the amount you can invest to $500,000.

You will need the following information to open a CD account.

• Social Security Number
• Credit card, debit card, or bank account number
• Current email address
• Online Banking ID and passcode (if applicable)
• Co-applicant’s personal information (if applicable - Social Security number, home address, and email address)

Be sure to use promotional offer code HYCD

Bank of America 7 month CD Application

Bank of America NEA is offering some of the best CD rates available, particularly for shorter term CD rates.

The current yield on a 3 month CD is 4.39% APY. These rates are only available to National Education Association (NEA) members. The minimum opening balance is $1000.

Additional CD rates and terms offered by Bank of America NEA.

Bank of America NEA CD Application

From now until October 31st, TradeKing will give you $50 for opening a brokerage account.

To qualify for this offer, new accounts must be opened and funded with $2,500 or more. Account funding must occur within 30 days of account opening, and one trade must be executed within 180 days of account opening. One offer per household. 

A minimum balance of $2,500 is required in the account (minus any trading losses) for the first six months or the $50 credit may be surrendered.

TradeKing only charges $4.95 per stock trade and .65 cents per option contract or market or limit orders.

Open an account at TradeKing and get $50

The Federal Deposit Insurance Corporation (FDIC) maintains a list of problem banks that isn’t published or shared with anyone else. So how can the average depositor or lendee know if their bank is a problem bank about to fail?

The Texas Ratio is one measure that might offer a clue. The ratio was developed by RBC Capital Markets analyst Gerard Cassidy in the 1980’s to forecast which banks could fail during the 1980’s real estate bubble, dejivo anyone?

The ratio is devised by comparing a bank’s troubled loans to it’s capital. If the amount of bad loans equals or exceeds it’s capital, a ratio of 100% or higher, the bank might not have enough capital to cover it’s losses related to the bad loans on it’s books.

If a bank’s Texas ratio is 100% or higher it doesn’t necessary mean the bank will fail, a bank can raise more capital to cover it’s losses, though not an easy thing to do these days during the credit crunch.

Individual deposits are now covered by FDIC insurance up to $250,000 so most depositors don’t have much to worry about a bank failing but if you have a business line of credit or are planning to obtain a mortgage from a bank that is on the list you should start thinking about banking elsewhere.

Here is a list of unofficial troubled banks compiled from the FDIC’s Statistics on Depository Institutions at http://www.geocities.com/tubeguy@rogers.com/troubledbanks.htm

To compile your own Texas Ratio list using the FDIC’s statistics, visit http://www2.fdic.gov/sdi/main.asp and use the following equation, Non-performing Assets and bank real estate owned (REO) divided by Equity and Loss Reserves.

ABC News recently reported on the Texas Ratio just after IndyMac Bank failed.

In a coordinated global effort, The Federal Reserve Bank along with The European Central Bank, Bank of England and Swiss, Canadian and Swedish banks cut rates by 1/2 percent.

The Federal funds rate is now 1.5%. Rates on deposits which have been going up might start to head south again. The average 1 year CD rate currently is 3.70% and the average 5 year CD rate is 4.13% as reported by bankrate.com.

Competition is heating up with the major bank’s CD rates. HSBC Bank is now offering one of the highest CD rates, a 6 month CD that has a 4.00% APY. The CD rate is only available online. The minimum deposit is $1,000. Citibank’s minimum deposit for a 6 month CD is only $500.

To qualify for the 4.00% APY you must deposit “new money”, meaning money not already deposited with HSBC Bank. After you complete the application online ( takes 10 to 15 minutes ) you will receive an application status via email. Your opening deposit can be made by transferring funds from any HSBC or other financial institution checking account or savings account. You can also mail a check made payable to HSBC Bank USA, National Association.

You will need the following information to open an account.

You must be at least 18 years of age and have a U.S. address to apply for a deposit account online. If you do not have a U.S. address, please call 1-800-975-HSBC (1-800-975-4722) Option 2.

The deposit application requires the following information:

• Social Security Number or Tax Identification Number
• If you are a non-US Citizen - Your Country of Citizenship, visa expiration date (if applicable), and Resident Alien Card Number (Green Card) or Passport Number, Country of Issuance, and expiration date
• Current driver’s license is required to open your account online
• Date of birth
• Mother’s maiden name
• Current address
• E-mail address
• Employment information
• Primary bank name, address and account number

HSBC 4.00% 6 month CD Rate Application

Citibank is offering one of the best CD rates for a 6 month CD. The annual percentage yield of 4.00% is very competitive for a major bank. The average 6 month CD rate is 3.17% as reported by bankrate.com.

The minimum opening balance for the CD account is $500. You can choose to have Interest paid monthly or at maturity.

The early withdrawal penalty is 30 days of interest, 90 days of interest if you reside in California or Nevada.

Be sure to use promotional offer code CKC6.

Citibank 6 month CD Application

The pending bailout is not just about saving Wall Street, it is also about saving the economy from spiraling down into a deep recession. The problems on Wall Street have already started dragging Main Street down with it. There is so much fear in the market right now, banks are not lending to anybody - individuals, companies and each other.

The rate banks charge each other for loans (the LIBOR - the London Interbank Offered Rate) has shot up overnight. For example, the 3 month LIBOR is at 4.05%, up from 3.88% and the rate banks charge each other for overnight loans is at 6.88%.

The Federal Reserve has been doing its part to ease the crunch by pumping money into the markets to provide liquidity but banks just aren’t lending because they are scared to lend.

All types of lenders had already been raising the bar for borrowers and were only lending to the best customers. With the uncertainty of the bailout they became even less willing to lend their money, further crimping the crunch.

Banks are even cutting back on credit cards and lowering the credit limit on borrowers, further squeezing borrowers. American Express has lowered the credit limit on about half its credit card holders. Amex is also offering fewer credit cards in areas where housing prices have fallen the most, which includes California, the southwest and Florida.

How does this affect you?

Need a mortgage or home equity line of credit? 

• Lenders are raising the bar for qualifying for a mortgage, most banks are once again requiring a 20% down payment.
• Loan Debt To Income has been lowered, your monthly loan payment should be no more than a certain percentage of your income, meaning you now qualify for less then you would have in the past. You can use this GinnieMae Affordability calculator to see how much you qualify for.
• Banks are also requiring higher credit scores to qualify for a home loan.
• Home equity lines of credit have been canceled or reduced as home prices have fallen.

Worried about being laid off?

Many companies fund their day to day operations and grow using short term credit. They accomplish this by selling short-term and long-term bonds in the credit markets. Right now, the short-term debt markets are at a standstill and the long-term debt markets are a bit more functional, but rates are high.

Companies with high levels of debt will be the first ones in trouble, but even companies with low levels of debt might have to resort to layoffs if they can’t get access to credit and the economy stalls.

What can you do to survive the pending credit crunch?

Start a budget and fund an emergency fund (if you don’t already have one).

1. Take inventory of your financial situation by making a list of all your income and expenses to know where you stand.
2. Expenses: There are basically two types of expenses - fixed cost and variable cost.  For example, your mortgage payment is the same every month but the amount you spend on food varies.  Shop fixed costs where it’s possible (like car insurance) and find ways you can cut back on variable costs.  Look for areas where discretionary spending can be curbed without causing too much discomfort or distress.
3. Subtract your expenses from your income. This is your budget starting point. Think about a dollar amount you would like to have in an emergency fund and save every month towards your goal. Experts recommend 3 to 6 months of expenses to tide you over in the event of a job loss.  
4. Try trimming your expenses, eat out less, shop around for cheaper car insurance. If you take the time to keep track of a budget you will be surprised how much you can cut back and still feel like you are living. Before you make a purchase, ask yourself, “Is this a need or a want?” When you clearly define needs and wants, making purchases is easier and you won’t feel guilty making certain purchases.
5. If you are staying within your budget, treat yourself from time to time, the pain of staying within a budget will be easier.

Another way to survive this uncertain economic period is to make sure your bank deposits are within the FDIC insurance limits.

The Certificate of Deposit Account Registry Service (cdars.com) allows you to deposit up to $50 million in Certificate of Deposit accounts. You earn the same CD rate across all banks your money is deposited in.  

Here is a MarketWatch.com video on spending less and saving more.