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Earning Interest, Reviews, Strategies to Save

Review of Chase Bank’s CD Rates

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Review of Chase CD rates
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Chase Bank is a consumer and commercial bank operated by JPMorgan Chase & Co., an international business firm dating back to 1799 that currently has $2.6 trillion in assets and operations worldwide. The bank, insured by the Federal Deposit Insurance Corporation (FDIC), has 5,100 branches and 16,000 ATMs across the United States. Its products include credit cards; checking, savings and CD accounts; and auto and home equity loans.

But Chase’s CDs are the subject of this article; they can be opened at a branch or completely online at term lengths ranging from one to 120 months.

How Chase CD rates compare with those of other banks

We compared Chase’s CD offerings with entries on our current list of the Best CD Rates for December 2017. On the positive side, you’ll need less money to qualify for a Chase CD than you might at other banks. Chase allows customers to open their CDs with a minimum deposit of $1,000, which is slightly lower than qualifying amounts at some other institutions. Chase CDs are also open to applicants who do not bank with Chase, in contrast with the practices of some banks and credit unions that require member checking or savings accounts.

However, Chase CD rates are far from the most competitive rates out there. You can easily get find better APY rates at other institutions, particularly for one-year CDs. If you decide to go with Chase, look into so-called “relationship rates” with a higher APY. Relationship rates are offered to customers who link their CDs to a Chase personal checking account.

On a 12-month CD for under $10,000, for example, you’ll currently draw twice the percentage rate offered on the standard CD.

As mentioned, a minimum of $1,000 is required to open a Chase CD account, and interest is compounded daily. Depending on the term, your earned interest may be paid monthly, quarterly, semi-annually, annually — and at maturity.

Here’s an overview of the rates Chase currently offers on its CD products. All rates were reviewed at Depositaccounts.com, another LendingTree-owned company, and are current as of Dec. 5, 2017.

CD term

APY

Min. deposit amount

1-Month

0.01%

$1,000

2-Month

0.01%

$1,000

3-Month

0.01%

$1,000

6-Month

0.01%

$1,000

9-Month

0.01%

$1,000

12-Month

0.01%

$1,000

15-Month

0.01%

$1,000

18-Month

0.05%

$1,000

21-Month

0.05%

$1,000

24-Month

0.05%

$1,000

30-Month

0.05%

$1,000

36-Month

0.05%

$1,000

42-Month

0.10%

$1,000

48-Month

0.10%

$1,000

60-Month

0.25%

$1,000

84-Month

0.25%

$1,000

120-Month

0.70%

$1,000

Source: DepositAccounts.com, Dec. 5, 2017

Chase CD relationship rates

Chase CD relationship APY rates are extended to customers who have a linked Chase checking account. You can apply online and if you use a transfer from your account to open the CD, the account can be opened the same day. The minimum deposit is, again, $1,000.

CD term

$0 - $9,999

$10K - $24,999.99

$25K - $49,999.99

$50K - $99,999.99

$100K - $249,999.99

$250K+

1-Month

0.02%

0.02%

0.02%

0.02%

0.02%

0.02%

2-Month

0.02%

0.02%

0.02%

0.02%

0.02%

0.02%

3-Month

0.02%

0.02%

0.02%

0.02%

0.02%

0.02%

6-Month

0.02%

0.02%

0.02%

0.02%

0.02%

0.02%

9-Month

0.02%

0.02%

0.02%

0.02%

0.02%

0.02%

12-Month

0.02%

0.02%

0.02%

0.02%

0.05%

0.05%

15-Month

0.05%

0.15%

0.15%

0.15%

0.20%

0.20%

18-Month

0.15%

0.25%

0.25%

0.25%

0.30%

0.30%

21-Month

0.15%

0.25%

0.25%

0.25%

0.30%

0.30%

24-Month

0.15%

0.25%

0.25%

0.25%

0.30%

0.30%

30-Month

0.15%

0.25%

0.25%

0.25%

0.30%

0.30%

36-Month

0.40%

0.60%

0.60%

0.60%

0.65%

0.65%

42-Month

0.40%

0.60%

0.60%

0.60%

0.65%

0.65%

48-Month

0.50%

0.70%

0.70%

0.70%

0.75%

0.75%

60-Month

0.60%

0.80%

0.80%

0.80%

0.85%

0.85%

84-Month

0.60%

0.80%

0.80%

0.80%

0.85%

0.85%

120-Month

1.15%

1.25%

1.25%

1.25%

1.29%

1.29%

Source: DepositAccounts.com, Dec. 5, 2017

Here’s a sample comparison between the APY on standard and relationship CDs on new accounts. To calculate on earnings at maturity, we assumed an account balance of $5,000.

Chase standard CD APY

Earnings at maturity

Chase relationship CD

Earnings at maturity

12 months at 0.01%

$.50

12 months at 0.02%

$1.00

24 months at 0.05%

$5.00

24 months at 0.15%

$15.01

48 months at 0.10%

$20.03

48 months at 0.50%

$100.75

120 months at 0.70%

$361.23

120 months at 1.15%

$605.69

Important information about Chase CDs

Fees

There are no monthly service fees, however there are $15 fees for inbound domestic and international wire transfers (waived if from another Chase account) and outbound domestic wire transfer fees. Accounts can be opened online. Deposits of more than $100,000 must be opened at a Chase branch office.

Non-Chase customer access

You do not need to have a Chase checking or savings account to open a standard Chase CD account. You’ll need to provide a Social Security number, driver’s license and contact information. Deposits must be made from a checking or savings account through your existing bank.

Maturity date and grace period
Law requires banks to alert consumers before the maturation date on CDs. Chase considers the maturity date as the last day of the term. It offers a 10-day grace period on all CDs with terms 14 days or longer. During the grace period, you can withdraw the funds without penalty or roll over the account to another term.

Automatically renewable CDs versus single-maturity CDs

Account holders have the option of opening an automatically renewable or single-maturity CD account.

With an automatically renewable CD, the account renews on the maturity date for the same term as the original one, making the new maturity date the last day of the new term. The standard rate will apply unless the owner qualifies for a relationship CD.

The single-maturity CD does not automatically renew and earns no interest following the maturity date. You may want to see if Chase is offering any promotional rates during the 10-day grace period if you plan to invest in another Chase CD using a ladder strategy.

Earning interest on a Chase CD

Interest on Chase CDs begins to accrue on the first business day of deposit into your account and is calculated on a daily balance, 365 days a year. Paid or credited interest can be withdrawn during the term or at maturity without incurring penalties. For maturities of more than one year, interest will be paid at least annually, according to the bank. If the CD matures and automatically renews, the interest in the account is rolled over into the new principal.

Early-withdrawal penalties and fees
According to Chase, early-withdrawal penalties are deducted from your principal and do not exceed the total amount of earned interest. The penalty is 1 percent of the amount withdrawn if the term of the CD is less than 24 months. The early-withdrawal penalty is 2 percent for terms of 24 months or more.

Chase CD early-withdrawal penalties can be waived upon:

  • Death of a CD owner
  • Disability of a retirement CD owner
  • Retitling of a CD
  • A court ruling that the CD owner is incompetent

The bottom line:

Chase’s CD rates are likely best for customers who link the CD to their personal checking accounts because they can qualify for those juicier relationship rates. The rates improve for longer terms and larger deposit amounts. Chase’s online tools allow you to apply for relationship CDs and track your investments. The minimum amount to open a standard CD account ($1,000) is on par or slightly lower than those required by other institutions. Overall, the APY rates are not as good as you can get from some competing banks and credit unions.

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Gabby Hyman
Gabby Hyman |

Gabby Hyman is a writer at MagnifyMoney. You can email Gabby here

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Balance Transfer

How to do a Balance Transfer with Chase

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

How to do a Balance Transfer with Chase

Chase offers one of the best balance transfer products in the market: Chase Slate®. You can save with a $0 introductory balance transfer fee for transfers made within the first 60 days of account opening and get 0% introductory APR for 15 months on purchases and balance transfers, and $0 annual fee. Plus, receive your Monthly FICO® Score and Credit Dashboard for free.

If you want to take advantage of the intro offer, you can click on “Go To Site” below. If you already have a Chase card and want to complete your balance transfer, keep reading and we will explain exactly how to get it done. Just make sure you complete the transfer within 60 days of opening the account.

Haven’t applied for your balance transfer with Chase? Just click below 

Make sure you complete the transfer as soon as you receive your card in the mail and never more than 60 days after you apply, because you can lose the introductory offer. Completing a balance transfer is easy. You can do it on the phone or online, and it should only take a few minutes.

What you need

You will need the account number and balance of the credit card that has the debt.  These cards will be referred to as the “transfer from” account. If you have a $3,000 balance at Citi, and you want to transfer it to your new Chase account, then you will need the account number and balance of the Citi account.  And, in this example:

  • The transfer from account is Citi.
  • The transfer to account is Chase.

Once you have that information, you are ready to go.

Call

You can call the customer service number on the back of your credit card, and they will be more than happy to help you complete the balance transfer. The phone representative will go through security checks and then ask for the credit card number and amount of debt that you want to transfer. Call center employees often receive a bonus to complete a balance transfer, so you will usually find a very eager person on the other side of the telephone line.

The bank makes the payment to your credit card for you.  If you are close to your due date, I recommend making the minimum payment to your card to ensure that you do not have any late fees. The payment (in this example, from Chase to Citi), can take up to 3 weeks. It is usually faster, but you should not take any chances and want to avoid being hit with a late fee.

Online

Most banks make it easy to complete a balance transfer online. Once you receive your credit card, you will need to sign up for online banking. Below, we will show you how to complete an online balance transfer with Chase. Click on these names if you’re looking for a step-by-step guide for these banks: Discover, Capital One or Barclaycard.

1. Login to your account.  On the “My Accounts” page, you will see the option to complete a balance transfer. Click on Transfer Balances.

 

Credit Card Slate

 

2.  Select an Offer. You should see the introductory offer listed. (In this example, you are looking at my credit card – which I have had for a while. No intro offer is listed)

 

Transfer Balance

 

3.  Input the following:

  • The account number of the credit card that has your debt right now.  This is the account number of the transfer from account.
  • The amount that you want to transfer

Most banks have a limit on the total amount that you can transfer.  At Chase, you can transfer no more than $15,000 from other accounts in any 30-day period.

 

Transfer Balance

 

4.  You will then be shown the terms and conditions of the balance transfer offer, which you will need to accept.

Here are the most important items:

  • Make sure the terms of the balance transfer match the terms of the offer when you applied. If you are expecting a $0 fee and a 0% interest rate for 15 months, make sure that is what you see. If there are any issues, call the bank directly.
  • Make sure you pay on time.  If you go 60 days late, you will lose your balance transfer offer

5.  You will then receive your confirmation.  Chase will pay your existing credit card bill to roll the debt over to their bank.  But, it can take up to 3 weeks.  So, we recommend that you make the minimum payment if your bill is due in the next 3 weeks.

Here is what the screen looks like confirming you transfer:

 

Confirmation

 

Once you see this screen, then you are in good shape.

Remember:

  1. Make sure you pay on time.  Paying late (60 days) can lead to a loss of your 0% interest rate.  And it would go to the penalty rate.
  2. Take full advantage of the balance transfer period to pay down as much of your debt as possible.

Still have questions? Email us at info@magnifymoney.com or tweet us @Magnify_Money

Customize best balance transfer credit cards offers

Nick Clements
Nick Clements |

Nick Clements is a writer at MagnifyMoney. You can email Nick at nick@magnifymoney.com

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News

Citi Credit Cards Playing Catch Up to Chase

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

MagnifyNews-02-01

This week, America’s biggest banks reported their earnings. At MagnifyMoney, we looked closely at the results of two leaders in the credit card market: Citibank and Chase. The financial results of both firms show that Chase continues to accelerate, benefitting from bold moves made during the crisis of 2008. Chase leapfrogged its competitors, de-throned Citi and continued to take market share. On the other hand, Citi is trying to catch up. Like Chase, Citi hired a former American Express executive to lead the charge. He is making increasingly expensive bets in a very different market environment, including a 2% cash back credit card and a very expensive deal to acquire the Costco co-brand deal. As the first quarter results for Citi demonstrate, it continues to lose market share to competitors. And the big announcements of the last three months will help drive market share growth. But at MagnifyMoney, we suspect much of this growth will not be profitable. This is good news for consumers: they can expect to get increasingly better deals from Citi. This is also good news for merchants like Costco, who can expect to get increasingly lucrative offers from Citi. However, the shareholders of Citibank may have a few more years of suffering ahead of them.

Chase Is Growing Much Faster Than Citi

During the first three months of 2015, spend on Chase credit cards increased an incredible 8% compared to 2014. And the balances also increased an impressive 1%. At Citi, spend only increased by 2%, and balances actually reduced by 3%.

Screen Shot 2015-04-16 at 12.17.02 PM

Credit card companies make money from three places: interchange revenue, fees and interest charged on revolving balances.

Interchange revenue is paid by merchants to the credit card companies whenever a purchase is made. Increased spending can be a good thing. However, expensive reward schemes can very quickly eliminate any benefit from interchange.

Fees have increasingly disappeared. Savvy consumers no longer pay foreign exchange fees. Over-limits are gone thanks to the CARD Act. Late fees are way down as a result of generally improving credit quality.

Interest remains the main engine of profitability. And balances are the most important indicator for generating interest income. And Citi is going backwards.

Chase: Smarter On Rewards

On average, credit card companies receive about 2% of every purchase from merchants. The goal of the bank is to design a rewards scheme that delivers high perceived value to the consumer, while giving up as little of the 2% as possible.

Chase offers rewards through three distinct products. It offers cash back via Chase Freedom®. It offers points via Chase Sapphire Preferred® Card. And it offers miles and points through co-brand partnerships. For example, Chase offers the co-brand credit cards for United Airlines and Southwest Airlines.

Chase has been incredibly smart in the way it designed its products. Chase Freedom® advertises 5% cash back, up to $1,500 in combined purchases in bonus categories each quarter you activate. However, you really earn an unlimited 1% on your everyday spend. Rotating categories offer 5%. But you have to opt in every quarter, and your spend in the bonus category is capped at $1,500. As a result, the actual cost of rewards is much closer to 1%. I would estimate a cost closer to 1.25%.

Citibank, on the other hand, is giving out 2% unlimited cash back (1% when you purchase and 1% when you pay your minimum balance) with Citi® Double Cash. It is basically giving away all of the interchange that it receives. There has never been a richer cash back product on the market. This is great for consumers. However, it will be incredibly difficult for Citi to make a good return on this product. And ultimately, I suspect this will be bad for consumers because Citi will likely have to reduce the awards.

Chase Sapphire Preferred® Card has established itself as a real competitor to American Express. Chase was not afraid to spend heavily on marketing in 2008 and 2009, when no one else was spending. By enabling people to transfer their points to travel partners like United, it actually created better perceived value than American Express Membership Rewards®. Citi has under-invested in ThankYou® Rewards for years. It offers no real airline transfer partners. Citi is now trying to create some brand equity in ThankYou®, but it will take a while. When Chase was advertising in 2008, it was easy to buy a large share of voice, because no one else way buying air time. Now it will be a lot harder.

And Chase has used the power of its entire bank to lock in exclusive deals with its airline partners. Chase has regularly used credit facilities, especially during the financial crisis, to ensure that it is the exclusive co-brand provider to United Airlines. Citi, which provided $1 billion of liquidity during the financial crisis to American Airlines, obviously negotiated no such guarantee. Now, after the American Airlines merger with US Airways, Barclaycard is issuing American Airlines credit cards in parallel to Citibank. Citi should be ashamed that it is in this position. Citi created the airline co-brand with AAdvantage, and now it’s sharing its most valuable co-brand credit card with a British bank that is not even a top 5 credit card issuer in the US.

Chase: Smarter On Balance Growth

Chase simplified its product set in 2008. In addition to Chase Freedom® and Chase Sapphire Preferred® Card, it created Chase Slate®. Chase Slate® exists for people who have credit card balances and are looking to pay off their debt faster. Chase created a simple, no-gimmick balance transfer card so any spend on the card goes straight to the bottom line, because there is no rewards cost. And people are very conscious of balance transfer fees. So, Chase has been able to create the best card, while making good money on any new spend of balances that stick around after the balance transfer period.

Citi has had a much more confusing approach to balance growth. After the crisis, it retreated dramatically from the space. Now, its coming back and giving away balance transfers at a 0% introductory interest rate for 21 months. This is a great value for consumers, but it is much harder to make this work economically.

Chase: Smarter During The Crisis

Gaining market share in the US credit card market is difficult. There was a window of opportunity in 2008, and only Chase decided to go for it. It invested heavily and aggressively in product development and marketing in the years after the crisis.

Citi followed the crowd. It cut marketing expenses. It cut credit lines of their customers, infuriating many loyal customers. It sliced off the entire partner business and called it “non-core.” That sent a great signal to its co-brand partners. Now that it is actually generating better returns than its branded business, Citi has brought it back into its core business.

So, while Chase was investing for growth, Citi was cutting, shrinking and annoying key partners. It takes a while to recover from that behavior, as the most recent results show.

Citi: Market Share Growth, But At What Cost?

Citi is now looking to grow its market share and invest in its product set. And its strategy looks remarkably like the Chase playbook. Unfortunately it will just cost Citi a lot more to execute.

It created a single cash back card, the Citi® Double Cash Card. But at 2%, I don’t know how it will make money.

Citi is investing in ThankYou® Rewards. But the program lacks the key airline partners to give it gravitas. And it is still a long way from American Express Membership Rewards® or Chase Ultimate Rewards®.

And it is chasing partnerships by signing big deals. Although the terms are not public, we can only imagine how much Citi spent to win Costco from American Express. Citi also defeated Chase in the deal. Given the importance of Costco to Amex, and the discipline of Chase in bidding for deals, we can imagine that this deal will deliver tremendous top-line growth, but most of the earnings will go to the partner and the customers.

What Next

Chase has had an amazing ride for the last five years. It will continue to enjoy the dividends of a brilliant strategy. However, the world is getting more competitive.

Citibank is creating products that offer incredible value to consumers. That will be a threat to Chase. And a new crop of online lenders are creating much cheaper ways to borrow. Companies like LendingClub and SoFi will be a threat to the entire credit card industry.

We expect Citi’s market share numbers and spending growth will start to catch up over the next 24 months. However, we wouldn’t bet that earnings will follow.

 

Nick Clements
Nick Clements |

Nick Clements is a writer at MagnifyMoney. You can email Nick at nick@magnifymoney.com

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News

The Big Banks Announce Earnings

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

review-full

The US banking scene is dominated by four mega-banks: Bank of America, Citibank, Chase and Wells Fargo. On January 14th and 15th, these banks reported their earnings. At MagnifyMoney, we look closely at the results of the credit card and retail banking divisions to see what they can tell us about the state of the American consumer, the cost of credit and the trends in savings account rates.

The headlines talked about disappointing earnings, and compressing net interest margins due to a low rate environment. But the mega-banks include consumer banking, as well as corporate and investment banking. If you peel the onion and look at the consumer business, you will see that banks are maintaining (or even expanding) their spreads in the consumer business to counter-act declining margins elsewhere. Although there have been massive settlements and penalties, banks are using low interest rates on savings accounts and high interest rates on credit cards to cover the costs of those settlements. So, while middle class America may feel good about seeing the headline settlement costs, they are in fact funding those settlements through their banking relationships.

Here is a quick summary of what we found

  • Banks continue to make outsized returns in their consumer banking and lending franchises: The Return on Equity of the consumer businesses remains high. Chase generated a 31% ROE. Bank of America generated a return of 26% (with a 36% return from the consumer lending business). Most banks have a target return of 10% – 12%, and their investment banks tend to be below the target return.

In the credit card industry:

  • Consumer spending is increasing: People made more purchases on credit in the last 3 months of 2014 than they did during the same time in 2013. Depending upon the bank, spend increased from 3% to 10%.
  • And people are paying their bills: The percent of people who are 30 days (or more) late on their credit card bills continue to decrease across all of the major issuers. Delinquency ratios were down 10% – 18%.
  • Credit card businesses continue to generate impressive yields: Borrowing on credit cards is expensive, and (despite all-time-low interest rates) banks continue to defend margins. The largest lender, Chase, saw its yield increase from 9.1% to 9.2%. Note: That number looks a lot lower than the interest rate paid by credit card borrowers, because people who pay their balance in full pay no interest. In addition, banks have promotional offers (for example, 0% interest rates), which bring down the blended yield. Our review of credit card interest rates show that, for borrowers, they can expect to pay 15% or higher if they do not have a promotional rate.

Savings Q4

Credit card companies make money in the following ways:

  • Interchange on spending: Every time you make a purchase on a credit card, the bank typically receives about 2%. Spending is increasing, so interchange revenue should be increasing.
  • Interest charged on borrowing: As people spend more, you can expect that they will revolve more. And, given that interest rates are being held firm despite low rates, this is an area of strength for banks.
  • The main costs for a credit card business are:
    • Operating expenses: the cost of people, equipment, marketing, and other similar expenses.
    • Credit costs: when people do not pay back, the balance is written off at 180 days past due.
    • Funding costs: banks just borrow the money from someone else in order to lend to consumers.
    • Credit and funding costs are still at cyclical lows.

All of the key drivers of credit card profitability remain strong. Don’t let the building and release of reserves confuses the situation. Because credit card businesses are growing, they will have to build reserves. But that does not mean that the business is doing worse – it is just a tax for growth. The underlying businesses have been strong, and delinquency remains low. However, future growth will come from expanding into higher risk segments. Expect to see more credit available in the next 12 months – especially to people who are higher risk. You can also expect to see delinquency start to deteriorate over an 18-24 months time frame, as these newer booking vintages begin to season.

delinquency Q4

Interest on deposits remains shockingly low

If you are looking to save money, the biggest banks are the worst place to keep your money. There is a war being waged online for deposits, with the best rates now reaching 1.25% for large balances. However, the interest rates paid on deposits at large banks remains shockingly low.

  • If you wanted to open a savings account today, Citi, Chase, Wells Fargo and Bank of America all pay 01% on a traditional savings account.
  • Wells Fargo bragged that the average cost of deposits declined to 0.09%, which is 2 bps lower than a year ago. And total deposits were up 8% Year-over-Year.
  • Bank of America bragged that the “rate paid on deposits declined to 0.05% in Q4 2014.”

What does this all mean?

  • Banks continue to get away with overcharging and underpaying retail banking consumers (a.k.a the middle class). The returns in the consumer business remain incredibly high.
  • If you are looking to borrow, don’t expect the near-0% interest rates to be reflected in your credit card interest rate. Banks continue to defend their top line interest rates, and credit cards for the mega-banks remain incredibly expensive ways to borrow.
  • If you are looking to save, the mega-banks have ignored the price war that is happening online. Yet, for some reason, we continue to give them money. Interest rates continue to decline, and banks continue to brag about it.

There is one upside to all of this: banks want more credit card debt. So, you can expect more aggressive 0% offers to lure customers. For savvy debt surfers, this means you will have more option to cut the cost of your interest and reduce the time that it takes to pay back your debt. We have just seen that in early January with Citizens Bank launching a 0% balance transfer offer for 15 months, with no fee.

Otherwise, the financial results just reaffirm our belief: your basic banking and borrowing should not be with the giant mega-banks.

promo-savings-wide

Nick Clements
Nick Clements |

Nick Clements is a writer at MagnifyMoney. You can email Nick at nick@magnifymoney.com

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