Archives for January 17, 2018

Connexus Credit Union 5-Year CD at 3.00% APY: Early Withdrawal Penalty Comparison

“The editorial content on this page is not provided by any of the companies mentioned, and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are author's alone.”

percentage2Connexus Credit Union has raised the rates on their 5-year Share Certificate to 3.00% APY with a 365-day early withdrawal penalty. They also have 1-year Share Certificate at 2.01% APY (90-day early withdrawal penalty). Both have a $5,000 minimum deposit. Anyone can join this credit union via partner organization Connexus Association for a one-time $5 fee.

It’s nice to see a 5-year CD hit 3% APY again, but the main drawbacks are that (2) rates may continue rising and (2) a year of lost interest is a significant early withdrawal penalty. To help illustrate this, I ran a comparison with the Ally Bank 5-year CD with a shorter 150-day early withdrawal penalty. The Ally CD is currently paying 2.30% APY with a $5,000 minimum deposit, so I will use that as the comparison rate. (You can also get 2.35% APY with $25,000+.)


As you can see, the penalty makes a big difference. Even if you make an early withdrawal at the last possible moment (59 months), you will never get anything higher than 2.39% APY.

If you do end up having to make an early withdrawal, the Ally CD with a smaller penalty will actually net you more money up until about 36 months. After 36 months, the Connexus 5-year wins out. For periods shorter than about a year, the likely best option is to just keep your money in a liquid online savings account. If you think rates will stay higher, you could also buy a 1-year CD and hope to roll it over.

Bottom line. If you’ve been waiting for 3% and/or you’re building a ladder of 5-year CDs where you are confident you won’t have to break it early, this Connexus certificate is currently a top rate and should be considered. Just be aware of the sizable early withdrawal penalty.

most attractive singles