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Axos Bank CD Rates Review

Find out whether the Axos Bank certificate of deposit (CD) rates beat out traditional banks and other online banks.
(3 out of 5) MyBankTracker Editor's Rating

Axos Bank iPhone App
Axos Bank iPhone App

You're here because you've come across Axos Bank's certificates of deposit (CDs) and want to know how they stack up to the competition.

A CD is designed to be a long-term commitment. You're right to take a closer look because opening any CD.

From the interest rate to the early withdrawal penalties, savers should be diligent in understanding the terms of a CD.

We analyze the CD options from the online bank to help you decide whether they're right for you and your savings goals.

In this Axos Bank CD Account review, we'll compare rates, fees, and services to other national and online banks.

Rates Higher Than Traditional Banks

A CD is a special type of deposit account that pays more interest than other types of deposit accounts.

Frankly:

The interest rate that you can earn is the most important part of a CD.

When you compare different banks’ CDs, the interest rate should be the number one thing you compare. Settling for a lower rate is like giving up free money, so choosing the right bank is important.

Axos Bank, like most online banks, tends to offer far more interest than brick and mortar banks do.

Why?

Online banks are cheaper to run than traditional banks are, so they can pass on the savings to their customers.

They save money by not paying to run branches or operate an ATM network.

Unfortunately:

Axos Bank’s CD rates are not as high as the rates from some of the other big-name online banks.

Unlike other banks, the amount you deposit to the CD won’t affect your interest rate. You’ll earn the same amount regardless of your balance.

Some other banks offer better rates for larger balances.

The thing that does affect your interest rate is the CD’s term.

The longer you plan to keep your money in the CD, the higher the interest rate will be.

Early Withdrawal Penalties

There is one key difference between CDs and savings accounts.

When you open a CD, you make a commitment: you agree not to make a withdrawal from the account for a set period of time.

This is known as the CD’s term.

For example, if you open a CD with a 12-month term, you promise not to make a withdrawal for 12 months.

Axos Bank offers CDs with the following terms:

  • 3 months
  • 6 months
  • 12 months
  • 2 years
  • 3 years
  • 4 years
  • 5 years

This variety of terms makes it easy to choose a CD with a term that works for you. Don’t forget that CDs with longer terms offer higher interest rates.

You might be tempted to open a 5-year CD so you can get the highest rate available.

Don’t forget:

You’re committing to keeping that money at the bank for 5 years.

If you break that commitment, you’ll have to pay a penalty. The penalty fee is calculated based on the amount of interest you earn each month.

Bank of Internet CD Early Withdrawal Penalties

CD Term Penalty
3 months 1.5 months of interest
6 months 3 months of interest
12 months 6 months of interest
2 years 12 months of interest
3 years 18 months of interest
4 years or longer 24 months of interest

Keep in mind that the penalty is based on the CD’s original term, not the remaining term.

That means you could wind up paying a huge amount in penalties if you open a long-term CD and make an early withdrawal.

It’s a much better idea to wait until the CD’s term ends before you withdraw the money.

Another thing to keep in mind is that it’s possible for the penalty to reduce your balance below the amount you originally deposited.

For example, if you opened a 4-year CD and withdrew the money after one year, you’d lose all the interest that you’d earned, and have to pay another year’s worth of interest out of your original balance.

This is the only way you can lose money by opening a CD.

Minimum Deposit Requirements

Many banks require that you deposit a certain minimum amount of money to open a CD.

CDs can be more expensive to open and manage for a bank than other types of accounts.

That means that the banks want to make sure the amount you deposit justifies their effort.

The downside:

Many people struggle to open CDs.

If they can’t get enough money together to open a CD, they’ll have to settle for a savings account instead, which will pay less interest.

Axos Bank has a minimum deposit requirement of $1,000.

This isn’t unusual, but many online banks have much lower minimum deposits.

If you can meet the $1,000 minimum, you can deposit as much as you’d like.

Keep in mind that CDs are insured by the Federal Deposit Insurance Corporation, but only to a point.

The FDIC offers up to $250,000 in insurance. If your balance exceeds that amount and the bank goes under, the FDIC will only reimburse you for $250,000.

IRA Versions

Individual Retirement Accounts (IRAs) offer tax benefits to people who use them to save for retirement.

Traditional IRAs let you deduct the amount you contribute from your income when you file your taxes, saving you money upfront.

Roth IRAs let you withdraw money tax-free, saving you money in the future.

Both are great choices for long-term saving.

IRA CDs are a popular choice for people who want safe, steady returns. They combine the tax benefits of an IRA with the guaranteed growth of a CD. They’re especially useful for people who are nearing retirement.

You can open both Roth and Traditional IRA CDs at Axos Bank.

The only limitation is that only 12, 18, and 36-month terms are available.

What Happens at Maturity

When the term of a CD ends, the CD is said to have matured. At that point, you are allowed to make changes without paying an early withdrawal fee.

Here's the deal:

Opening a CD is a long-term commitment.

You’re committed to every aspect of it: the amount you deposited, the term, and the interest rate. Because you’re locked in for the full term of the CD, you should keep close track of when your CDs mature.

If you don’t take any action when your CD matures, most banks will roll your balance into a new CD with the same term as the original CD.

The new CD’s interest rate will be based on the current market rate for CDs with that rate.

Many banks will notify you shortly before your CD matures, giving you a chance to make your decision. Still, you should keep track on your own in case your bank forgets to notify you.

Axos Bank provides a 10-day grace period from the day that your CD matures.

If you make changes or a withdrawal during that time, you won’t have to pay any fees. If you wait 11 days after the maturity date, you’ll have to pay an early withdrawal penalty to make changes.

Once you make your changes, you’ll be locked into your new CD. Make sure you know what you want to do before taking any action.

How Does It Compare?

Axos Bank’s CDs are better than the CDs offered by brick and mortar banks, but other online banks tend to offer better choices.

If you want to shop around for the best CD, you should compare the following things.

Start by: 

Comparing the interest rate of the CDs you’re considering. You want to earn the highest rate possible. Choosing a lower rate is like giving up free money, so if all else is equal go for the highest rate.

Next:

Make sure the bank you’re considering offers CDs with terms that work for you.

Some banks specialize in long-term CDs, offering terms as long as 7 years. Others specialize in short-term CDs. Choose the one that’s right for you.

Don’t forget that interest rates change all the time. If you think rates will rise, you might want to opt for a short-term CD. If you think they might fall, a long-term CD may be better.

Finally:

Take note of what will happen when your CD matures.

You want to make sure you have a long enough grace period to make changes to your CDs. If a bank doesn’t offer notice of a CD maturing or has a very short grace period, you’ll have to be even more diligent about keeping records.

Conclusion

Axos Bank offers adequate CDs, but other online banks offer better options.

Look at other online banks to get the best deal on an online CD.