Don't ignore local banks when looking for a CD

[disneysteve]

With so much of our financial lives happening online today, it's easy to overlook local banks but that can be a mistake. A quick search on Bankrate.com for CDs up to 18 months long shows a maximum rate of 2.95%. Last week my mom noticed an ad in the paper (yes she still gets and reads the daily paper) for a local bank offering a 13 month CD for 3.1%. I took her over this morning for her to purchase one.

It's not a huge difference but local banks will often offer special promos like this when they are looking for new customers and new money. That bank's normal term rates are awful. Their 12 month CD is only paying 1.1%, half of what my Ally savings account pays, and nearly 1/3 of what the promo rate is for just 1 more month duration.

So if you are looking for a CD, check the local paper. Go to the library if necessary. It could be well worth your time. These promo deals often aren't even on the bank's website. This deal isn't on the website anywhere I can see. You'd only know about it if you saw the ad or happened to walk into the bank.

[bjl584]

Don't ignore local banks for a loan either.
They are usually much more willing to work with you and with special case scenarios than the national chains.

[riverwed070707]

Credit unions too. I switched to a local CU when they were offering 5% interest on CHECKING ACCOUNTS with balances up to $25k. While they're rates slowly declined over the years, I just checked and it's still over 2%. I only switched when I moved out of the area and no longer had a local branch which made deposits and such tough

[~bs]

my local bank interest and cd rates are abysmal

[disneysteve]

my local bank interest and cd rates are abysmal

They generally are, except when they run a freak promo like this case. As I said, their 12-month CD pays 1.1% but the 13-month pays 3.1%, a huge difference. No sane person should be buying a 1.1% CD when online savings accounts are all north of 2%.

[~bs]

3.1% for 13 months is a good promotion.

I dont think my local banks offer even 2% for 5 years. I'm not sure the reason why, but all the local banks here (credit unions a bit better) offer horrible rates, and the residents just seem to accept it. The local bank credit cards are the same way. Most of them offer less than 0.01 per point in value, which is pretty much the minimum standard nowadays

[Smallsteps]

It is a matter of market I guess.
The local banks and CUs around here have had some super deals to stay competitive.
I am one of those crazies who still has an account with my bank that is paying a very low interest rate. Some people are loyal as I am to a local bank manager who once bent over backwards to get me a loan to remodel during the time when banks got super choosy after the housing crash.
They have always had exceptional service so I keep a small amount there even though my new accts in a CU pay me much more in interest.
Others are simply lazy and do not want to change or bank is in a convenient location for them.

[disneysteve]

Others are simply lazy and do not want to change or bank is in a convenient location for them.

I'm always surprised by how many individuals (not businesses) bank at a local place (even if it's just a local branch of a national bank). I very, very rarely step foot in a physical branch. It'd say it's been 1-2 years since the last time I had to go into a branch for something, so the "convenient location" thing baffles me. I always wonder what exactly so many people are doing at the actual branches. The parking lots are always packed. Many of the local banks (TD, Republic, etc.) are now open 7 days a week. Why? What is it that people are going there for that warrant that sort of access? You can get cash at the ATM. You can make deposits at the ATM or at your kitchen table with your phone for check deposits. You can send and receive money with various mobile apps and online. I've never understood what keeps all of the branches in business.

[Fishindude77]

Good post !
I'm a big proponent of banking locally and developing a face to face relationship with a local banker whenever possible.
That relationship might just help you out sometime. If you need a loan quick, or need something out of the ordinary, that relationship will be real beneficial.

Regarding CD's, they will sometimes bump up their rates a bit when trying to raise cash. They have to get the cash in order to do loans, and loans is where the real money in banking is,
Several years ago a local bank (not mine) was advertising CD's at 5% when everyone else was around 4% or less. I bought $100,000 worth of 5 year, 5% CD's and that turned out to be a real sweet deal as interest rates started dropping further and stayed considerably lower than that for the 5 year period.

[~bs]

^ except that's not the truth anymore because the fed has been pumping easy money into the system for decades. Its part of the reason why savings interest rates are so low. Your bank doesn't need your money for loans when they can get unlimited ultra low interest money from the Fed. What you said is the way it SHOULD work, but the whole reason for the credit bubble and subsequent implosion is precisely because it doesn't work that way anymore.

Face to face can help a lot, especially in business. As a private citizen, your $500 average checking account balance is essentially meaningless to them.

[Smallsteps]

I'm always surprised by how many individuals (not businesses) bank at a local place (even if it's just a local branch of a national bank). I very, very rarely step foot in a physical branch. It'd say it's been 1-2 years since the last time I had to go into a branch for something, so the "convenient location" thing baffles me. I always wonder what exactly so many people are doing at the actual branches. The parking lots are always packed. Many of the local banks (TD, Republic, etc.) are now open 7 days a week. Why? What is it that people are going there for that warrant that sort of access? You can get cash at the ATM. You can make deposits at the ATM or at your kitchen table with your phone for check deposits. You can send and receive money with various mobile apps and online. I've never understood what keeps all of the branches in business.

I too very rarely ever go into an actual location.
I did in July to open a new account at a new place so I sat and watched people ( my favorite hobby) I have always been where I can follow a conversation in public from many feet away.... Most from the statements I overheard where there trying to fix a calamity.
Trying to get out of some auto payment thing they signed up for / missing/ stolen credit/ debit card. / hilarious excuses and explanations for overdrafts or why the credit score is so low but they still do not understand why the bank wont give them a loan etc. / many just trying to get a do-over and out of fees and charges.
Many I know are always playing run in with all the cash you can borrow to cover a payment so it does not bounce.

[scfr]

Absolutely. And try walking in to a new branch if you are interested in special rates or bonuses. Sometimes new branches will offer specials that they don't advertise anywhere. You can only find out about them by walking in and asking.

Having a personal relationship with a local bank can be really helpful. Sometimes higher rates are available ONLY IF you actually ask someone face-to-face for them. Why not ask your local banker if they can give you a better rate, closer to what you can get online? The worst thing that can happen is they say no.

[scfr]

Good post !
I'm a big proponent of banking locally and developing a face to face relationship with a local banker whenever possible.
That relationship might just help you out sometime. If you need a loan quick, or need something out of the ordinary, that relationship will be real beneficial.

Regarding CD's, they will sometimes bump up their rates a bit when trying to raise cash. They have to get the cash in order to do loans, and loans is where the real money in banking is,
Several years ago a local bank (not mine) was advertising CD's at 5% when everyone else was around 4% or less. I bought $100,000 worth of 5 year, 5% CD's and that turned out to be a real sweet deal as interest rates started dropping further and stayed considerably lower than that for the 5 year period.

Good point - I've had the experience of local banks offering sweet CD rates for a really short period of time. They advertise it, don't specify an end date, and cancel the deal as soon as they have raised enough funds.