bank rates

Why I Chose Barclays Over CD Rate Rivals

barclays logoRecently, I wanted to invest a five-figure sum in a 60-month FDIC-insured bank CD.

Barclays Bank, GE Capital Retail Bank and CIT Bank were the leading candidates. Each was posting a 2.25% APY, tied for the top spot on our CD Rates Leaderboard. I already had CDs at each and was familiar with their customer service operations.

Because their posted rates were identical, I had to select among them based on less tangible factors than simple return on investment. I chose Barclays. Here’s why.

Reason 1. FDIC insurance.

Although I had plenty of room for additional FDIC insurance coverage at all three banks, a new GECRB CD would have required a payable-on-death account.

Because, at both Barclays and CIT, my total deposits after opening the new CD would be under $250,000, a POD account would be unnecessary.

I establish POD accounts for extra deposit insurance, not estate distribution, purposes. Nevertheless, the total POD accounts I can have naming a beneficiary is limited by the amount I provide for that beneficiary under my will.

Consequently, I view POD beneficiaries as valuable assets and avoid squandering them in opening new CDs.

A strike against GECRB.

Reason 2. Early withdrawal penalties.

Given the contractual ability of institutions to amend, retroactively, early withdrawal terms, I don’t place undue reliance on them.

Where posted rates are the same, however, I have a bias for institutions offering the least restrictive or punitive terms for extracting CD money early.

Both Barclays and GECRB charge an EWP on 5-year CDs equal to six-months’ interest. CIT’s penalty is 12 months’ interest.

A strike against CIT.

Reason 3. Online application and account management.

Of the three banks, Barclays has, in my view, the most customer-friendly online CD system.

Barclays’ CDs are easy to open, particularly when you’re already a customer (it takes a couple of minutes).

Also, its online banking pages permit automatic and immediate processing of two account maintenance operations near and dear to me – establishing or changing an interest payment option (capitalization versus disbursement) and adding or removing a POD beneficiary.

You can open new CDs at GECRB and CIT easily enough, but ongoing maintenance items like changing interest payments and POD beneficiaries (which I do occasionally) require contact with a customer service rep and are therefore prone (and, for me, have given rise) to errors.

Anyway, after pondering these intangibles, I decided to open a Barclays’ CD.

Of course, had GECRB or CIT been posting a slightly higher rate – say, two one-hundredths of a percentage point – I’d have tossed aside intangibles and gone with the best yield!

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