First Bank has a solid presence in the financial world and has been committed to providing a wide variety of financial products for years.
Certificates of deposit, or CDs, are considered a low-risk savings option. You agree to deposit a specific amount of money for a fixed period, and in return, the bank guarantees a fixed interest rate for the duration of the term.
This article provides a comprehensive look at First Bank certificate of deposit rates, term lengths, and other important things to consider if you’re thinking about investing.
Understanding First Bank’s CD Offerings
First Bank offers several different types of certificates of deposit, each with its own rate structure and features.
Types of CDs Offered
- Fixed Rate Time Deposits: These CDs feature a fixed interest rate for a specific term, which can be anywhere from 7 days to 60 months. You’ll know exactly what rate you’re getting for the length of the term.
- Rate Exchange Time Deposits: These deposits allow you to exchange your rate during the term.
- Variable Rate Time Deposits (Prime Saver): With these CDs, the interest rate can go up or down, based on the Prime Rate.
Factors Affecting CD Rates
A few factors influence the CD rates you’ll be offered:
- Economic conditions and market interest rates: When the economy’s strong and interest rates are high, CD rates tend to be higher, too.
- CD term length: Shorter-term CDs usually have slightly lower rates than longer-term CDs, since you’re committing your money for a longer period.
- Deposit amount: Sometimes, a higher deposit amount can qualify you for a better rate.
First Bank CD Rates: A Detailed Look
Let’s dig into what you can expect from First Bank’s CD rates. Keep in mind that these are hypothetical examples, as the bank doesn’t publish specific rates online.
Fixed Rate CDs: Terms and Potential Rates
Fixed-rate CDs offer a guaranteed interest rate for the entire term. Here’s a breakdown of what you might find:
Short-Term CDs (3 months, 6 months, 1 year)
Let’s say a 3-month CD offers an APY of 4.50%, a 6-month CD comes in at 4.65% APY, and a 1-year CD offers 4.75% APY. Short-term CDs are great if you think interest rates might rise soon, as you won’t be locked into a low rate for too long. However, they typically offer lower rates than longer-term options.
Mid-Term CDs (2 years, 3 years)
For a 2-year CD, you might see an APY around 4.85%, while a 3-year CD could be closer to 4.90%. These CDs strike a balance between earning a decent return and not tying up your money for too long. They’re a good option if you have a specific savings goal in mind a few years down the road.
Long-Term CDs (5 years)
A 5-year CD could potentially offer an APY of 5.00%. Long-term CDs typically offer the highest rates, but you need to be comfortable with locking up your funds for an extended period. They’re ideal if you’re saving for a long-term goal like retirement.
Variable Rate CD (Prime Saver)
First Bank also offers a Prime Saver CD, where the interest rate is linked to the Prime Rate. This means the rate can go up or down depending on broader economic conditions. Variable-rate CDs can be beneficial if interest rates are expected to rise, but they also carry the risk of lower returns if rates fall.
Minimum Deposit Requirements
While First Bank doesn’t explicitly state the minimum deposit requirements online, most CDs typically require a minimum deposit of around $500 to $1,000. It’s always worth checking to see if there are any promotional CDs with lower minimums if you’re just starting out.
Things to consider before investing in First Bank CDs
Before you lock your money away in a First Bank CD, here are a few key things to keep in mind:
- FDIC Insurance: Your deposits in First Bank CDs are FDIC insured up to $250,000 per depositor. This means your money is safe, even if the bank fails.
- Early Withdrawal Penalties: If you need to access your money before the CD matures, you’ll likely face a penalty. For example, if you have a CD with a term longer than one year, you might lose six months’ worth of interest. Shorter term CDs may have smaller penalties.
- Impact of Fees on Earnings: While CDs are generally low-fee products, always review the fee schedule. Fees can eat into your earnings, especially on smaller CD balances.
- Tax Implications: The interest you earn on your CDs is usually taxable as income. It’s a good idea to talk to a tax advisor to understand how CD interest will affect your tax situation.
Key Takeaways
First Bank CDs can be a safe and predictable way to grow your savings. However, it’s important to remember that CD rates may not keep pace with inflation, and you may face penalties for withdrawing your money early.
Before you commit to a CD, take some time to think about your investment goals and how much risk you’re comfortable taking. Also, compare First Bank’s CD rates and terms with those offered by other banks and credit unions.
For the most current information and personalized advice, contact First Bank directly.