Union Bank CD Rates 2023 Review: Should You Open?
To put your savings on overdrive, you can use certificates of deposit (CDs).
With a CD, you promise not to touch the money for a set period of time. In return, you earn a higher interest rate.
On your search for the right CD, you might come across Union Bank, a major regional bank in on the West coast.
It offers a variety of CDs, which may make it difficult to choose between them.
Through this review, learn all about the bank's CD rates, early withdrawal penalties, and other features that may help you save smarter.
The Interest Rates
CDs offer higher interest rates than other accounts, including savings, checking, and money market accounts.
Now:
The first trait to look at is the interest rate.
It is the primary reason that you're considering a CD.
However:
Union Bank is a small, regional, brick and mortar bank.
The downside is that brick and mortar banks tend to offer lower interest rates on deposits than online banks do.
Brick and mortar banks have to buy or rent real estate, pay for maintenance and upkeep, pay for utilities, and hire people to staff each branch. Those costs can add up quickly.
For this reason, Union Bank CD rates are very low.
By contrast, online banks are much cheaper to operate.
They don’t have to worry about running branches and can centralize their operations. Because they’re so inexpensive to operate, online banks can offer low fees and great interest rates.
Further:
You might even find a better deal from another regional or national bank, many of which will provide promotional or special CDs that are actually very competitive.
Early Withdrawal Penalties
CDs are a lot like savings accounts.
The difference between the accounts is the level of commitment you have to make.
When you put money in a savings account, you can withdraw it at any time.
When you open a CD, you make a promise to keep your money in the account for a set period of time. This is the CD’s term.
Union Bank offers CDs with terms ranging from 7 days to 60 months.
You can choose nearly any term between these two extremes.
This is good because:
That level of customizability makes it easy to choose the right term for you. Aim to have your CD mature right when you’ll need access to your money.
CDs with longer terms will offer higher interest rates than short-term CDs, which might tempt you into opening a 60-month CD, even if you cannot commit your money for the full term.
Resist that temptation.
If you have to withdraw money from your CD before its term ends, you’ll have to pay an early withdrawal fee.
Watch out:
Union Bank uses a slightly complicated method to calculate the size of the fee.
Union Bank CD Early Withdrawal Penalties
| CD Term | Penalty |
|---|---|
| Less than 32 days | The greater of all interest earned, 7 days’ interest on the withdrawn amount, or the amount of interest that would have been earned on the amount withdrawn for half of the original term |
| 32 days to 91 days | The greater of 31 days’ interest or the compensating penalty |
| 92 to 1 year | The greater of 91 days’ interest or the compensating penalty |
| More than 1 year | The greater of 181 days’ interest or the compensating penalty |
The Compensating Penalty: Subtract the interest rate being paid on your CD from the rates paid on new CDs with a term equal to your CDs remaining term.
Then calculate the interest you would earn on the amount withdrawn at that rate, assuming you left your money in the CD for the rest of the term.
Making an early withdrawal is the only way that you can lose money by making a deposit to a CD.
If the penalty is greater than the amount of interest you’ve earned, you’ll have to forfeit some principal to pay the rest of the fee.
Minimum Deposit Requirements
When you want to open a CD, you might find that the bank requires that you make a deposit of a specific, minimum amount of money.
Banks use the money you deposit to fund activities such as mortgage lending.
They want to be certain that the amount of money you deposit will be useful because they pay costs related to the management of your account.
Union Bank has a relatively low minimum deposit requirement for most of its CDs.
- CDs with a term of 32 days or more have a minimum deposit requirement of $350.
- CDs with a term shorter than 32 days require a $2,500 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.
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. If you need additional protection, you’ll have to open a new CD at a different bank for the amount over $250,000.
IRA CDs
Union Bank offers CDs in both traditional and Roth IRAs, letting you combine the benefits of both.
Individual Retirement Accounts offer tax benefits to savers who plan for their retirement.
Traditional IRAs offer more immediate tax savings.
When you make a contribution to a traditional IRA, you can deduct the amount you contribute from your income when you file your tax return. That means that you’ll have a smaller tax bill or a larger refund at the end of the year.
Money that you contribute to a Roth IRA is taxed as usual when it goes into the account.
When you make withdrawals from a Roth IRA, you pay no tax on the principal or earnings.
That means your money can grow tax-free.
Other Union Bank Savings Options
Union Bank offers a wide variety of other savings options if you want to use the bank to save for retirement.
Money Market Savings
Union Bank’s Money Market IRA Savings Account is an FDIC insured account that pays a tiered rate of interest based on your balance.
The more you can deposit, the more interest you’ll earn.
Variable Rate CDs
Union Bank’s Variable-Rate Time Deposits are a lot like CDs, but the interest rate can change over time.
With a normal CD, you lock in the interest rate when you open the account.
With a Variable Rate CD, the interest rate will increase or decreased based on market rates.
Bonus Rate CDs
Union Bank offers Bonus Rate CDs, which pay a slightly higher rate than a standard CD.
You can only use money that is new to Union Bank to open a Bonus Rate CD.
What Happens at Maturity
When your CD’s term ends, your CD is said to have matured.
When your CD matures, you have the chance to make withdrawals and changes without paying a fee.
Union Bank gives customers a 10-day grace period from their CD’s maturity date to make changes.
Any changes made during this time will not incur a fee. If you make no changes, your CD’s balance will be rolled into a new CD with the same term.
You’ll need to wait for the new CD to mature before making changes.
How It Compares
Union Bank’s CDs offer low interest rates, but also low minimum deposits.
If you’re having trouble meeting the deposit requirements elsewhere, Union Bank might be a good option. However, you should always consider multiple options and research other banks nearby and online.
When comparing CDs, start by comparing the interest rates of the CDs. All else being equal, choose the highest rate.
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 Final Verdict
Union Bank’s CDs don’t offer an exciting interest rate, but the minimum deposit is lower than most other banks’ requirements.
If you want to use a brick and mortar bank, but can’t meet most minimum deposits, Union Bank is worth considering. If you don’t mind an online bank, you’re probably better off choosing an online CD.
They pay higher interest rates and have lower minimum deposit requirements.
