bank rates

Bank CDs: Online Vs. Brick-And-Mortar

A recent piece about choosing between bank and credit union CDs got me thinking about a similar issue I sometimes face:

If the yield offered by two competing institutions is similar, is there any reason to choose a CD of an online bank (such as Synchrony or CIT) over a CD of a traditional brick-and-mortar bank (such as First Republic or Rabobank)?

As with the bank/credit union CD question, the answer is “it depends.”

However, my general experience has been that online banks are better at establishing and administering CDs than brick-and-mortar banks.

I’m usually nervous sitting in a bank branch, across from a “personal banker,” opening a CD.

The principal reason is that my CD information is being entered into the bank’s computer system by the banker – not by me.

I’m basically surrendering control of the CD’s terms to someone else.

Moreover, that personal banker is often unsure about features I consider important, like PODs and interest disbursements, having spent most of his or her day doing things other than opening CDs.

And sometimes I’m at a legacy branch of an acquired institution, dealing with inexperienced employees who are working with an unfamiliar system.

With online banks, I can establish all or most of the CD’s terms by typing them myself into an online application system, without human interference.

Even where the online bank requires contact with a telephone rep to arrange certain details, I’m likely dealing with someone familiar with CDs.

Last year, I wrote about my problems with a local, legacy-type branch of BBVA Compass when I tried to change my CD interest payment option.

My most recent negative experience involved CDs at California-based Rabobank.

When I established the CDs at my local branch in 2012, I set them up as payable-on-death accounts and named my beneficiary.

I received printed CD receipts showing the correct beneficiary information, having signed electronic signature cards to the same effect.

When I recently tried to change the beneficiary, however, the bank discovered that my signature cards had vanished from its system and that the original banker had incorrectly assigned the accounts a code designating each “individual account without POD beneficiary.”

By now, I’ve developed a close and friendly working relationship with my local Rabobank bankers.

I like and respect them.

Unfortunately, though, this relationship has developed largely as result of fixing errors in CDs opened by previous employees.

There are exceptions, naturally. I never have problems at brick-and-mortar First Republic and always have them at online

But, as they say, the exception proves the rule.

Don't miss out on the next bank deal. Get the newest deals delivered straight to your inbox!

Comments (0)
1 Star2 Stars3 Stars4 Stars5 Stars (2 votes, average: 5.00 out of 5)
No Existing Comments

Comments are closed.