bank rates

First Tech Woos CD Buyers With Bonuses

If we were looking for affirmation on our hunch about banks and credit unions making a grab for more new money, we just got it.

Through Nov. 30, the Mountain View, California-based First Tech Federal Credit Union is giving cash bonuses for new share deposits from new and existing members.

Five promotional tiers, which start with a minimum deposit of $25,000, reward from $200 to as much as $1,500 — although you’ve got to deposit $1 million in new money to receive the top bonus. Here are the tiers of rewards:

Your best bet is First Tech’s 36-month CD, which we told you about in early September. It pays 1.60% APY with $500 minimum deposit.

Obviously, boosting your minimum deposit to just the first tier will affect your earnings and, of course, your interest rate.

With that $200 bonus, a $25,000 deposit nets you $1,420.57 instead of $1,220.57 and raises the rate to 1.88% APY.

The second-tier bonus, with a $50,000 minimum deposit, gives you an interest rate in the neighborhood of 1.85% APY.

Either way, you’ll earn more that the top nationally available 36-month CD rate on our CD Rates Leaderboard, which is just 1.50% APY.

As we noted before, First Tech membership is easy.

Anyone who works for the State of Oregon or one of numerous tech companies listed on the credit union’s website can join, as well as anyone who lives or works in Lane County, Oregon.

But all savers can join First Tech by first becoming a member of the Financial Fitness Association for a $5 fee. Credit union membership also requires you open a share saving account with a $5 minimum balance.

Members can buy CDs and take advantage of the savings bonuses online or at a branch.

There are 40 branches in California, Colorado, Georgia, Idaho, Massachusetts, Oregon, Texas, Washington and Puerto Rico.

After six years of driving savers away with record-low rates, you might be wondering why anyone would suddenly try to woo them, and their money, with cash bonuses.

We suspect it’s because the Federal Reserve is widely expected to begin pushing interest rates higher next year.

The government-controlled bank has driven short-term interest rates to record lows by drastically reducing what’s called the federal funds rate, which is what commercial banks pay to borrow money from each other through the Fed.

With that rate essentially zero since December 2008, banks and credit unions have been able to get pretty much all of the money they need from the Fed, essentially for free. They haven’t needed to pay savers for deposits.

But with the Fed expected to push the fed funds rate significantly higher over the next several years, forward-looking banks and credit unions are looking for ways to lock up cheap deposits before that happens.

We’ve already seen a modest rally in rates, particularly 5-year CD rates, and now cash bonuses. It’s a trend we expect will gather steam over the next few months.

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