bank rates

Elements Financial Offers Nationally Available Step-Up And Add-On CDs

Elements Financial is marketing two somewhat unusual but, from my perspective, attractive longer-term CDs.

Called Rate Climber Certificates, these certificates of deposit give holders one-time rights to:

  • Raise the rate should posted rates for the same type and maturity CD increase, and …
  • Add to the balance at the time of such a rate increase.

The credit union’s 34-month Rate Climber CD pays 1.50% APY, and its 54-month Rate Climber CD returns 2.00% APY, with a $1,000 minimum deposit ($500 for those under 18).

The 34-month rate equals the highest nationally available 36-month return on our CD Rates Leaderboard.

The 54-month rate lags the Leaderboard’s top 2.25% APY 60-month yield, explainable by its shorter maturity and step-up feature.

Headquartered in Indianapolis, Elements operates seven Indiana branches and allows these CDs to be used in Individual Retirement Accounts, or IRAs.

Those eligible for membership include employees, students, retirees or members of numerous organizations, including Eli Lily and Co., Amazon.com and Angie’s List.

Savers nationally may become members by joining Tru Direction, a nonprofit association promoting financial literacy, for a one-time $5 fee.

There’s an online application process for both membership and non-IRA account opening. IRAs can be opened by mail or email.

I’ve opened two 54-month non-IRA Rate Climbers, each with a $1,000 balance, and am establishing a 54-month IRA Rate Climber, with a $1,000 current-year contribution.

Now, here’s the unusual thing: The Rate Climber permits an addition to the balance only if rates go up. Typically, add-on CDs are designed to hedge against rate declines.

Nevertheless, I believe the coupled step-up and add-on features can be valuable in a rising interest rate environment, while the low initial balance limits risk should rates fail to go up.

Thus, I can add funds to my CDs should Elements increase its 54-month posted rate to a level which, while perhaps not attractive for a CD of that term, is attractive for a CD with a term equal to the remaining term of my Rate Climber.

If, for example, in 30 months the posted 54-month Rate Climber rate is 2.50% APY, I can, by adding to my deposit, establish what is in effect a 2.50% APY 24-month CD.

Also, Elements has told me that funds transferred from another IRA can be used to add to my IRA Rate Climber.

Of course, I’m taking a chance that future rates, changes in product offerings or other credit union actions (or shenanigans!) may produce neither step-up nor add-on.

But, with only $1,000 “down,” and a relatively decent initial rate, it’s a risk I’m comfortable taking.

(Warning: The online Truth in Savings Act disclosure doesn’t provide for either the step-up or add-on right. The rights are specified in a disclosure mailed after account opening.)

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