Radius Bank CD Rates Review: Worth Investing In?
Radius Bank is a Boston-based online bank that focuses on providing banking services to citizens of the city.
Among the accounts that the bank offers are its certificates of deposit (CDs).
This commitment is the number one thing that differentiates a CD from other types of bank accounts.
Your agreement to keep your money in the CD for a set period of time makes it easier for the bank to predict how much money it needs to keep available for customers to withdraw.
That allows it to use your deposits more effectively to offer loans and services to other customers. The increased interest rate offered on CDs compensates you for making things easier for the bank.
If you’re looking to open a new CD, in this review find out everything you need to know about Radius Bank’s CDs.
Not Among the Top CD Rates
CDs pay far more interest than other types of bank accounts, like checking, savings, or money market accounts.
The number one reason to open a CD over another type of account is its higher interest rates.
If you’re comparing CDs from different banks, the first thing you should look at is the interest rate each offers.
Radius Bank is an online bank that doesn't rely on a network of physical branches and ATMs. Paying for physical locations can get quite expensive, and the bank needs to be able to cover those expenses.
Online banks, by contrast, are much cheaper to run.
This means that Radius Bank is able to offer higher CD rates than what you'd find at brick and mortar banks.
Compared to other online CD rates, Radius Bank doesn't quite match up as a strong competitor -- other online banks provide much higher CD rates.
Many banks will offer different interest rates based on the amount of money that you deposit. Radius Bank does not do this.
You will earn the same interest rate regardless of whether you deposit $500 or $500,000 to your CD. This is good for people who aren’t able to deposit much more than the minimum amount required.
The primary factor in determining your CD’s interest rate will be the CD’s term. Longer terms result in higher interest rates.
Early Withdrawal Penalties
CDs, like savings accounts, are intended to be used to store extra cash for the long-term. Still, there is a key difference between the two types of accounts that you must remember.
When you open a CD, you agree to leave your money in the account for a set period of time. This is known as the CD’s term. You promise not to withdraw money from your CD until the CD’s term ends.
Radius Bank offers the following terms for its CDs. Only three terms are available online.
- 3 months
- 6 months
- 9 months
- 12 months (available online)
- 18 months (available online)
- 24 months
- 36 months (available online)
- 48 months
- 60 months
With the variety of options available, you’ll have little trouble finding a CD with a term that works for you.
If you’re unable to visit a branch in-person, you’re slightly more constrained and might need to look to other banks if you need a more customizable term.
It can be tempting to open a CD with a longer term to earn a higher interest rate.
If you cannot truly commit to leaving your money in the account, resist this temptation. If you withdraw money from your CD before its term ends, you’ll have to pay an early withdrawal fee to compensate the bank for your unexpected withdrawal.
Radius Bank charges early withdrawal fees based on the original term of your CD.
The size of the fee is calculated using the amount of interest you earn in a day.
Early withdrawal penalties for Radius Bank CDs are:
- 3 to 6 months: 90 days’ interest
- 9 months: 180 days’ interest
- More than 9 months: 365 days’ interest
Keep in mind that early withdrawal penalties are the only way that you can lose money by opening a CD.
For example, if you open a 9-month CD and then withdraw your money after 3 months, you will have earned 90 days of interest.
Your fee will be double that amount.
You’ll forfeit all of the interest you earned and have to pay the remainder of the fee out of the principal.
Minimum Deposit Requirements
Many banks will not allow you to open a CD without making a sizable opening deposit.
CDs use the money you deposit to your CD to offer loans and other services to other customers. The bank wants to make sure that you’re depositing enough to the CD that it’s worth the effort of managing the account.
These minimum deposit requirements can block a lot of people from opening CDs. If they can’t get enough money together, they’ll have to open a savings account, which pays a lower interest rate.
Radius Bank requires an opening deposit of $1,000 for CDs with a term less than one year. CDs with a term of one year or more have a minimum deposit requirement of $500.
The requirements are relatively low when compared to some brick and mortar banks, which means you may have more luck with opening a CD at Radius Bank if you don’t have much money available to deposit.
If you want to deposit more than the minimum, don’t forget that CDs are insured by the Federal Deposit Insurance Corporation, but that the insurance has limits.
If your balance exceeds that amount, any amount over $250,000 will be uninsured.
If you need additional protection, you’ll have to open a new CD at a different bank for the amount over $250,000 -- or open another CD with a joint owner.
Individual Retirement Accounts (IRAs) give savers a great way to build a retirement nest egg while getting tax benefits.
Unfortunately, Radius Bank does not offer IRA CDs, so you’ll need to find another bank if you want to open one.
Traditional IRAs give savers a tax break in the year that they save. When you contribute money to a traditional IRA, you can deduct that amount from your income when you file your tax return.
That means you’ll pay less tax or get a larger refund for the year. You pay taxes on the money when you withdraw it from the account.
Roth IRAs require that you pay taxes as normal when you make contributions. However, you pay no tax on the principal or the earnings when you withdraw from the account. This means you pay less tax in the future.
CDs give consumers safe, predictable returns, making them popular among people nearing retirement.
What Happens at Maturity
When a CD’s term ends, the CD is said to have matured.
When that happens, you have an opportunity to make changes or withdraw money from the account without paying an early withdrawal fee.
Radius Bank gives you a seven-day grace period from the maturity date of your CD. You can make changes during this period fee-free.
If this period ends and you make no changes, your CD’s balance will be rolled into a new CD with the same term. The new CD’s rate will be based on the current market rate.
How It Compares
Radius Bank’s CDs are relatively average when compared to other brick and mortar banks’ CDs.
The interest rates are not particularly high or low when compared to the CDs offered by other banks.
Possibly their greatest attraction is their low minimum deposit requirements, but many other banks also offer similar minimum deposit requirements.
Online banks tend to offer higher interest rates and lower minimum deposits, so you should look into those options.
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.
Radius Bank doesn’t do anything to make its CDs more appealing than the CDs offered by other banks.
If you’re in the market for a CD look into online banks due to their high interest rates and low minimum deposit requirements.