Popular Direct CD Rates 2023 Review
Hunting for the highest certificate of deposit (CD) rates may have led you to Popular Direct, the online banking division of Popular Bank.
As you seek to find a place to put your hard-earned money for long-term growth, the Popular Bank CDs are definitely worth considering.
You might be captivated by their extremely attractive interest rates.
If you’re looking to open a new CD, in this review learn everything you need to know about Popular Direct CDs and compare them to other options that may be a better fit for you.
Rates Are Competitive
A CD is a special type of deposit account that offers more interest than checking, savings, or money market accounts.
The interest that you can earn is one of the primary reasons you’d open a CD, so it can be argued that a CD’s interest rate is its most important aspect.
You should always start by comparing the interest rate when you’re trying to compare CDs from different banks.
The truth is:
Settling for the CD with a lower rate is like giving up free money.
Popular Direct is the online branch of Popular Bank. Online banks are much cheaper to run than brick and mortar banks, so they can offer higher interest rates than traditional banks can.
Online banks don’t have to worry about paying for physical locations and their associated staffing costs.
Popular Direct’s CDs offer competitive interest rates when compared to other online banks.
It’s longer-term CDs often beat out the competition while it’s shorter-term CDs roughly match other banks’.
One thing to note is that Popular Direct’s CDs pay the same interest rate regardless of the amount of money that you deposit. Many banks will offer higher rates for CDs with higher balances.
Many people are locked out of earning the best available rate.
This isn’t the case at Popular Bank. The only thing that affects your rate is your CD’s term. Longer-term CDs offer higher interest rates.
Early Withdrawal Penalties
CDs are designed for long-term storage of extra money, much like a savings account. However, there is a key difference between the two.
When you open a CD, you make a commitment to not withdraw any of the money you’ve deposited until a specific amount of time has passed.
The amount of time you choose is known as the CD’s term.
Popular Direct offers CDs with the following terms:
- 3 months
- 6 months
- 12 months
- 18 months
- 2 years
- 3 years
- 4 years
- 5 years
With so many terms available, you shouldn’t have any trouble finding a CD term that works for you.
Keep in mind that CDs with longer terms offer higher interest rates. If you can commit for a longer period of time, you can earn more money.
Though you may be tempted to open a long-term CD if you can’t make a long-term commitment, don’t do it.
If you try to make a withdrawal before your CD’s term ends, you’ll have to pay a penalty.
At Popular Direct, the early withdrawal penalty is based on the amount of interest you are earning. The size of the fee also varies with the CD’s term.
Popular Direct CD Early Withdrawal Penalties
|Less than 91 days||89 days of interest|
|91 days to 12 months||120 days of interest|
|12 months to 36 months||270 days of interest|
|36 months to 60 months||365 days of interest|
|More than 60 days||730 days of interest|
Remember that the penalty is based on the CD’s original term, not the amount of time left until the CD matures.
That means you could wind up paying more than you expect if you have a long-term CD that you withdraw from near its maturity date. Always wait until your CD’s term ends if you can.
Another thing to note is that it’s possible for an early withdrawal penalty to reduce your balance below the amount you deposited.
For example, if you open a 60-month CD and make an early withdrawal 90 days later, you’ll be charged 180 days of interest.
You’ll forfeit all the interest you earned and pay the remainder of the fee out of the principal.
This is the only way you can lose money by opening a CD.
Minimum Deposit Requirements
Most banks won’t let you open a CD unless you are able to deposit a certain, minimum amount of money.
CDs can be more expensive for the bank to manage when compared to checking or savings accounts.
That means the banks want to make sure you deposit enough money to make the management costs worth it.
Unfortunately, these minimum deposits leave many consumers unable to open CDs. If you can’t meet the minimums, you’ll have to settle for a savings account, which pays less interest.
Popular Direct has a very large minimum deposit. You cannot open a CD with anything less than $10,000.
That means you’ll have to save for quite some time before you can open a CD with Popular Direct.
Keep in mind that CDs are insured by the Federal Deposit Insurance Corporation, but that the insurance has limits.
The FDIC will only protect up to $250,000 in your account. If your balance exceeds that amount, any amount over $250,000 will be uninsured.
CDs offer safe, steady returns, which makes them particularly popular with people who are nearing retirement.
Unfortunately, Popular Direct does not offer the option to open an IRA CD.
Individual Retirement Accounts (IRAs) offer tax benefits to people who use them to save for retirement.
Traditional IRAs offer immediate tax savings.
When you make a contribution to a traditional IRA, you can deduct the amount you contributed from your income when you file your tax return.
That means that you’ll pay less income tax in the year that you make contributions.
When you withdraw money from your IRA in retirement, you’ll pay income taxes on the withdrawals.
Roth IRAs offer future tax savings. You cannot deduct contributions from your income, so you pay the full taxes upfront.
Instead, you won’t pay any tax on the withdrawals you make, including withdrawn earnings.
What Happens at Maturity?
When a CD’s term ends, the CD is said to have matured. A CD’s maturity date is your opportunity to make changes to the CD without paying an early withdrawal fee.
When you’re opening a CD, you must remember that CDs are long-term commitments and that you commit to all aspects of the CD: its term, interest, rate, and how much you deposit. You can’t add more or change its rate later on.
If you don’t do anything when your CD matures, Popular Direct will roll the balance into a new CD.
This new CD will share the same term as the original CD and its interest rate will be based on market rates.
Most banks will notify you in advance of your CDs’ maturity dates. Still, you should keep track of the maturity dates so you have time to make plans.
Popular Direct offers a 10-day grace period from the date that your CD matures.
You can make changes at any point during this grace period without paying a fee. If you miss the grace period, you’ll have to pay an early withdrawal penalty before you can make changes.
Once you’ve made your changes, you’ll be locked into a new CD, so make sure to plan out what you’re doing before taking action.
How It Compares
Popular Direct offers CDs that offer better rates than brick and mortar banks and rates that are on par with other online banks’ CDs.
Their biggest flaw is their large minimum deposit requirement. Many online banks with similar rates have lower deposit requirements.
When you’re comparing CDs from different banks, look at the following factors.
Start by comparing the interest rates of the CDs. Opt for the highest rate if all else is equal.
Also, make sure that the bank you’re working with offers a term that works for you. Some banks specialize in long-term CDs and others in short-term CDs.
Finally, take into account what happens when your CD matures. Make sure you have enough time to make changes so you won’t get locked into a new CD.
The Popular Direct CD is a good choice for people who can meet its minimum deposit.
If you don’t have $10,000 to deposit but want similar rates, look into other online banks’ CDs.