Barclays increased the rate on its 2-year CD today from 1.15% to 1.35% APY. That’s now a very competitive rate for 2-year CDs. This CD rate increase continues a trend that we’ve seen in the last few months in which most of the rate increases have been on short- and mid-term CDs. The large majority of long-term CD rates have held steady.
Barclays’ CDs have some nice features that give them an edge over CDs from other internet banks. First, Barclays’ CDs have no minimum deposit. The early withdrawal penalty is 90 days simple interest on the amount withdrawn for CDs with terms of 24 months or less. For CDs with terms greater than 24 months, Barclays charges 180 days simple interest on the amount withdrawn. The grace period when a CD matures is 14 calendar days. You can receive an interest disbursement from your CD on a monthly basis. You have the option to keep interest in your CD account or transfer it to another account (either the Barclays savings account or a verified external account). These features are listed in Barclays’ Terms and Conditions document (link is on the bottom of Barclays’ website).
One downside with Barclays is that they do not offer IRA CDs.
When I opened a Barclays CD two years ago, the application process was simple and smooth. One of the nice features of the application is the ability to designate beneficiaries which will make an account a Payable on Death (POD) account. No social security number was required for the beneficiaries. Another nice feature of the application process was the funding. I chose an ACH transfer to fund the CD, and it went smoothly. They use a trial deposit system to verify the external account. Two small deposits will be made to the external account. No withdrawals are done. External account can be a checking or savings account. You also have the option to mail in a check to fund the CD.
Barclays Online Savings Account
Barclays continues to have a good deal on its online savings account. It has a competitive rate of 1.00%. Since the savings account was launched in March 2012, there has been only one rate cut. That happened on May 2013 when the yield went down from 1.00% to 0.90%. It went back up to 1.00% last December.
Barclays’ online savings account has several nice features such as no minimum balance requirement and no monthly fees. Barclays also has a nice ACH transfer system. I have more details on its ACH system in this blog post.
The Barclays internet bank is part of Barclays Bank Delaware which is a FDIC member (FDIC Certificate # 57203). The bank is best known in the U.S. for partnering with companies in offering co-branded credit cards. It's part of the U.S. division of Barclays, a British multinational megabank.
Barclays Bank Delaware has an overall health grade at EpBooks.us of A+ with a Texas ratio of 5.51% (excellent) based on December 31, 2014 data. Please refer to our financial overview of Barclays Bank Delaware for more details. The bank has been a FDIC member since 2001.
How the Barclays 2-Year CD Rate Compares
In addition to comparing Barclays’ 2-year CD to 2-year CDs of other banks, you may want to compare it to Barclays’ 5-year CD. The 5-year CD has a 2.25% APY and an early withdrawal penalty of 180 days of interest. When the penalty is factored in, the 5-year CD when closed at 2 years would have an effective yield of 1.69%. The 2-year CD has an early withdrawal penalty of only 90 days of interest. That gives the 2-year CD an advantage over the 5-year CD if it’s closed anytime before 11 months. You can see the effective yields by month of both the 5-year and 2-year CDs using our Early Withdrawal Penalty Calculator.
When compared against 2-year CDs with minimum deposit requirements of $25K or less, Barclays ties the internet bank leaders. Only a credit union offers a higher rate. That’s the easy-to-join Quorum Federal Credit Union which has a special 25-month CD with a 1.50% APY.
The above rates are accurate as of 4/1/2015.
To search for nationwide CD rates and CD rates in your state, please refer to the CD rates section of EpBooks.us.