Marcus by Goldman Sachs CD Rates Review

Dec 11, 2017 | 1 Comments

When you have a savings goal, where you keep your money matters. A savings account may be right if you need to save money for a short-term need. Think things like a summer vacation or setting aside cash for holiday shopping.

A certificate of deposit, on the other hand, may be a better fit if you have something big to save for and you don't need the cash right away. For example, you might use a CD to save money to buy a home or as a supplement to your retirement savings.

You can find CDs at a traditional bank but an online bank is likely to offer a better interest rate on what you save. Marcus by Goldman Sachs - Goldman Sachs Bank USA, is an online bank that features CDs with competitive rates. Find out whether they're the right choice for your savings needs.

Earning Interest With Your CD Savings

When you open a CD with Marcus by Goldman Sachs, you'll earn interest on what you save. The rate you can earn on your CD depends on the length of the CD term. Those terms range from 6 months to 6 years. As the term increases, so does the APY.

Some online banks also tier the rates based on how much you save. At Marcus by Goldman Sachs Bank, the rates correspond to length of the CD term. That means if you choose a 6-year CD, you'd earn the same APY whether you save $5,000 or $50,000. Overall, Marcus by Goldman Sachs Banks CD rates are among the highest that you can find.

There's also a 10-day CD rate guarantee on new accounts. As long as you fund your CD within the first 10 days of opening your account, Marcus by Goldman Sachs Bank will pay you the highest rate available for your CD term.

Tip: Use a CD calculator to find out how fast your money will grow.

How Much Do You Need to Set Up Your CD?

Some online banks set the bar fairly high for opening a CD. For instance, you may need $1,000 or $2,000 to get started. Marcus by Goldman Sachs Bank, on the other hand, puts the minimum initial deposit at just $500.

That's good if you don't have a lot of cash to save all at once. You have up to 30 days from the initial opening to fully fund your CD account. Unfortunately, you can't add additional funds into the CD after that cutoff.

Easy to set up a CD ladder

You can, however, set up a CD ladder using multiple CDs. It works like this. You open CDs with varying maturity dates. This is the date when you can withdraw your initial deposit, along with the interest you've earned. The length of the CD term determines when it matures.

Ideally, the maturity dates are staggered so you have CDs maturing periodically. For example, you might have a six-month CD, a nine-month CD, a 12-month CD and an 18-month CD. As one CD matures, you can withdraw your savings and the interest, or roll the money over into a new CD.

The idea behind a CD ladder is that you have access to your money when you need it. With a savings account, for example, you're able to make up to six withdrawals per month. A CD, on the other hand, requires you to leave the money alone until you hit the maturity date. If you try to withdraw your initial savings before the CD matures, your bank could charge you a penalty.

There's no limit on the number of CDs you can add to your ladader but Marcus by Goldman Sachs Bank limits you s to how much you can save. The maximum you can save across all your savings or CD accounts that you own individually is $250,000. For joint accounts, the limit goes up to a combined maximum of $500,000.

Withdrawing Your CD Savings Early

Marcus by Goldman Sachs Bank does assess an early withdrawal penalty if you crack into your CD ahead of time. This penalty is calculated based on the amount of simple interest earned on the CD and the length of the CD term. The longer the term, the more days of simple interest you'll forfeit. Your CD account will also be closed if you withdraw your savings early.

Marcus by Goldman Sachs CD Early Withdrawal Penalties

CD Term Early Withdrawal Penalty
Less than 12 months 90 days of interest
12 - 60 months 270 days of interest
More than 60 months 365 days of interest

Again, this is where having multiple CDs in a ladder can come in handy for avoiding early withdrawal penalties. Let's say you've started saving with CDs but you haven't gotten around to building your emergency fund yet. Your car breaks down or your roof springs a leak and you need $1,500 to make repairs.

Without an emergency fund to fall back on, you might have to charge the expense to your credit card and risk racking up in interest charges. Because you set up a CD ladder, however, you know that your next CD is set to roll over in a matter of weeks.

You can charge the repairs and then withdraw the money from your CD once it matures to pay off the balance. Best of all, you wouldn't have to worry about the early withdrawal penalty.

When Your CD Matures

It's important to keep track of your CD maturity date, especially if you have more than one or you're planning to withdraw your savings. Luckily, Marcus by Goldman Sachs Bank will send you a notice before the CD reaches its maturity date.

You then have a 10-day grace period to either renew your CD, close it or make any changes to the term or amount. This grace period starts on the day after the maturity date and goes for 10 days.

CD renews under the same maturity term

If you don't contact Marcus by Goldman Sachs Bank by the end of the grace period, your CD automatically renews for another term. The new term begins the day after the maturity date of the previous term. The CD will receive the APY of the corresponding term as of the time that it is renewed. Marcus by Goldman Sachs Bank will send you another notice outlining the renewal conditions.

In other words, your money doesn't just disappear if you don't do anything with your account before the grace period ends. You should still be paying attention to your maturity dates, however. If the CD renews automatically, you wouldn't be able to get your money out of the account until it matures again, unless you're willing to pay the early withdrawal penalty.

Can You Save in an IRA CD?

An IRA CD is a special type of CD that combines the benefits of an individual retirement account with the safety of a CD.

For example, if you have a traditional IRA CD, you might be able to deduct the money you contribute to it each year. With a Roth IRA CD, you wouldn't pay any taxes on qualified withdrawals.

Unfortunately, Marcus by Goldman Sachs Bank doesn't currently offer any kind of IRA CD product. There are, however, some online banks that do give savers an IRA CD as an option for saving for retirement.

Goldman Sachs Bank vs. Other Online CDs

Aside from Goldman Sachs Bank, there are other online banks vying for your business. Looking at what they have to offer can help you decide which CD is the best fit. Here are three other CD accounts to consider.

Synchrony Bank CDs

Synchrony Bank features CDs with terms as short as three months. You can also opt for a term of up to five years instead. Rates for the CDs are tiered, based the term length and the amount you save. You'll need at least $2,000 to open a new CD. That may be a hurdle for savers who have less money to get started.

You have your choice of a regular CD or an IRA CD. The rates and minimum deposit for both are the same. Synchrony Bank also charges an early withdrawal penalty, although you can withdraw the interest you've earned at any time penalty-free.

Ally Bank CDs

Ally Bank is known for its high yield savings accounts but you can also save in a CD. One of the most attractive features is the low entry point. There's no minimum amount required to open a CD.

The CD terms range from three months to five years. The rates are slightly lower than what Goldman Sachs offers but they're still very competitive. You'll pay an early withdrawal penalty if you cash out a CD early but there's no monthly maintenance fee or other hidden fees.

Discover Bank CDs

Discover Bank features the longest CD term, at 10 years. At the same time, it also has the highest minimum opening deposit of the banks listed here, at $2,500. CDs come with tiered rates that increase as the length of the CD term increases.

If you're considering a longer term CD, be sure that you've got a plan in place for covering short-term savings needs or emergency expenses. Locking your money up in a 10-year CD could help you snag a higher APY but it may not pay off if you have to withdraw your savings before maturity.

Final Verdict

Opening a CD with Goldman Sachs Bank is a great move because the rates are among the best on the market.

The biggest worry is the policy regarding early withdrawals -- the fees are relatively hefty, especially for long CD terms. However, you shouldn't go approach CD savings with the mentality that you're going to withdraw the money on a whim. Again, consider the CD ladder strategy to minimize the losses from penalties.

Remember to review and compare the terms, the rates, and the early withdrawal penalties at any bank before making a final decision.

More: The Best CDs of the Year
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Tuesday, 13 Feb 2018 4:36 PM