CBC Federal Credit Union 5-Year CD at 5.00% APY (up to 5.25% APY)

CBC Federal Credit Union is a small credit union that is offering some top certificate rates as of 4/12/23. NCUA-insured. Here are the rate highlights:

5-year certificate at 5.00% APY ($500 minimum).
5-year certificate with Epic Premium Checking account: 5.25% APY ($500 minimum).
Early withdrawal penalty for 5-year certificate is 365 days of dividends (will eat into principal if needed).
The rates on their 1-year, 2-year, 3-year, and 4-year certificates are also competitive, with and without the Epic Premium Checking Account.

Their Epic Premium Checking Account offers various perks including a discount on loan interest and also a boost of 0.25% to 0.50% on certain Term Share Certificate Rates. However, it does charge an $8/month fee that cannot be waived. If you close the Epic Premium checking account or it becomes inactive, then you lose the rate boost AND the interest rate on your CD might drop to the current rate. Whether the extra rate boost is worth the monthly fee and maintaining activity on the checking account depends on the amount deposited and your own preferences.

Unknown if there is a credit pull with a new membership application. This is common with credit unions, but I did not see anything come up on my credit monitoring alerts after my application. Must keep $5 minimum in Share Savings account as long as you are a credit union member. Hat tip to DepositAccounts.

Membership eligibility. Although in Southern California with only four physical branches, their eligibility criteria is actually open to anyone nationwide. You can:

Live, work, worship, or go to school in Ventura County
Participate in programs to alleviate poverty or distress in Ventura County
Participate in associations, businesses, or other legal entities headquartered or located in Ventura County
Maintain a facility located in the Ventura County
Have a family member that is an existing CBC member
Importantly… one of the eligible associations is the American Consumer Council, which you can join as part of the sign-up process and CBC FCU will cover the membership fee.

My thoughts. I wasn’t sure if I should post about this, as the last time I posted a CD deal from a smaller credit union, the rate dropped in only two days. These small credit unions usually offer up these high APYs when they have specific funding needs and then they will drop the rate once that dollar amount has been met. However, the purpose of this blog is to share what I am up to, and this is an example of a motivated individual being able to access a much better interest rate than even a billionaire hedge fund manager.

For comparison, as of 4/11/23, the 5-year Treasury bond rate is 3.54%. For retirees and semi-retirees with large cash/bond balances, this is a meaningful rate difference. I don’t know where rates will go in the future, but I like to build a ladder and this is one of the best rates for my “5-year rung” in a while.

If you wish to get in on this rate, you should act quickly and temper your expectations. It’s a good enough deal that it is quite possible that there will be enough new applications to overwhelm their limited staff. You might go through the application process, possibly take a credit pull hit, and have the rate fall before you can fund the certificate. I’m not saying this will happen, but it is possible. Of course, it is also possible that this is only the start of multiple places offering long-term 5% APY CDs.

In terms of best practices, I would recommend taking extra care when applying online and uploading a very clear picture of your photo ID. You want to avoid any hiccups that would require human intervention. If you do have to call, be polite and patient. Once you get your Share Savings account number, use it to transfer funds over online within a few days. (Some people choose to wire funds as that is instant.) Then you must call up CBC FCU and open up the certificate over the phone as an existing member with funds ready to go.

Based on their website, they appear to be using the same backend software as many other credit unions.

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CBC Federal Credit Union 5-Year CD at 5.00% APY (up to 5.25% APY) from My Money Blog.