Where can you find some of the highest-paying bank CDs in the nation? Try cyberspace.
More banks are offering above-average yields on the Internet, because it’s a cheap way for them to reach you and try to get your business. The bait: Yields as high as 1.25 percentage points above what the typical bank offers you on savings.
The implications of Internet banking are enormous. Instead of just hunting for the best deals in your hometown, with Internet access you’ve broadened your shopping to the entire U.S.
Granted, only a few institutions thus far are doing electronic trolling, but the banking industry is headed that way–and fast.
Examples of outfits that accept out-of-state deposits:
– Salem Five Cents Bank, Massachusetts, on Jan. 15 was offering a one-year CD with a 6.28 percent yield and a $2,500 minimum. That yield compares with a nationwide average of 5.03 percent on the same day, according to Bank Rate Monitor. Salem’s Internet address: http://www.salemfive.com/index.html.
– Treasury Bank, Washington, D.C., had a 5.1 percent yield on a $2,500 minimum money market account, versus a national average of 2.63 percent. Contact: http://www.treasurybank.com.
– With a $50,000 minimum deposit, you could earn 5.64 percent on a money market from Republic National Bank of Arizona, http://www.rnbank.com.
Hike your deposit to $75K, and Stearns County National Bank, St. Cloud, Minn., will pay you a 5.74 percent yield, http://www.stearns-bank.com/index.html.
“It’s not rocket science,” said Thomas W. Lynn, Treasury Bank’s president. “The whole approach is cost-effective–the more we can get to potential customers, the more we can get back.”
Indeed, the whole idea of pulling in new customers from afar has so intrigued the new breed of cyberbankers that, in many cases, their high savings yields are available only to folks who reach them on the Internet. They hype “specials of the week,” just like the butcher counter at your supermarket.
Not only can PC users check out a bank’s latest rates on-line, they can also browse the site for the institution’s statement of financial condition, find out how to qualify for a loan and figure out monthly mortgage payments with an interactive calculator.
Besides showing their toll-free 800 number on the screen, many banks invite you to fill out an on-line application to open an account and simply click a button to shoot the application to them electronically.
One outfit that’s received a ton of publicity because it conducts banking only on-line–it has no building–is Security First Network Bank, Pineville, Ky. When you visit Security First’s site at http://www.sfnb.com, it’s virtual reality all the way, beginning with a view inside a lobby. You can click onto an information desk, rate display, teller’s window or you can see a demonstration.
Is it safe for consumers to do business this way? Yes. The entire U.S. banking industry, not just part of it, today is rock solid, having rung up a record $50 billion in profits in 1996. Plus, virtually all the banks promoting high CD yields on-line enjoy a top three-star safety rating from Veribanc, Inc., an independent research firm based in Wakefield, Mass.
For other high-rate deals on the Internet, try: 1st Source Bank, South Bend, Ind., which offers a 5.87 percent yield on a $500-minimum, six-month CD, http://pawws.com/1stSrc; and Central National Bank, Waco, Texas, with a 5.65 percent yield on a $1,000-minimum, nine-month CD, http://www.cnb-waco.com/special.html.
Other tips: For all the highest CD and money market account deals, check Bank Rate Monitor’s free Web site, http://www.bankrate.com.
Always shop high cyberyields the same way you would shop any out-of-state bank:
– Tell the bank how much you wish to deposit, and for how long.
– Ask for how long the rate and yield are good.
– Are there higher yields available for larger deposits?
– What are all the fees and charges on the account, and how could you avoid paying any of them?
– Make your check payable to the institution, and be sure to write your name, address and Social Security number on the back.
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Robert Heady publishes Bank Rate Monitor, a newsletter based in North Palm Beach, Fla.
