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A certificate of deposit allows you to store money and collect interest at a high rate. The annual percentage yield (APY) for CDs often surpasses what you’ll find with savings accounts and money market accounts. CDs have terms that range from three months to ten years, and you will incur a penalty fee if you withdraw funds early.
Some CDs do not have penalty fees, so you don’t get penalized if you need to withdraw money from a CD. However, no-penalty CDs tend to have lower APYs than CDs with penalty fees. CIT Bank offers a wide range of CDs, some with penalties and some without them. You can choose from many term lengths and receive the corresponding APY.
In this article
What are CIT Bank CDs?
CIT Bank CDs are financial products that help risk-averse consumers generate a return on their extra cash. You can’t access money in a CD until the maturity date unless you are willing to pay a penalty fee, but CIT Bank has some no-penalty CDs available.
One of the main strengths of CDs over high-yield savings accounts is that the rates are fixed. Most savings accounts and money market accounts have variable interest rates. Those rates can decrease if the Federal Reserve decides to cut interest rates.
However, people with CD accounts don’t have to worry about rate cuts until their accounts mature. That’s because CDs like the ones CIT Bank offers come with fixed interest rates.
CIT Bank CDs are insured by the FDIC. The online bank was founded in 2009 and is a subsidiary of First Citizens Bank. CIT Bank also offers eChecking accounts, home loans, and other financial products.
- 3.50% APY
- $1,000 minimum to open
- No account opening or maintenance fees
How do CIT Bank CDs work?
CIT Bank offers several types of CDs. Its term rate CDs have terms that range from six months to five years. The online bank currently offers competitive rates that are as high as 3.50% APY. You must make a $1,000 minimum opening deposit to use a CIT Bank CD. While it’s a competitive deposit requirement compared to other banks, you can open a CD with some financial institutions with a minimum deposit of $100-$500.
CIT Bank does not have any account opening or maintenance fees for its CDs. You will receive daily compounding interest, which will allow you to maximize how much you earn from a CIT Bank CD. CIT Bank also offers an 11-month CD with a 3.50% APY and no penalty fees. It’s a good option for people who want to lock in a rate but have access to their funds for an emergency.
How much do CIT Bank CDs cost?
CIT Bank CDs are free to use. You won’t have to worry about any monthly maintenance fees or account opening fees. However, you may incur an early withdrawal penalty fee if you withdraw funds from your CIT Bank CD before the maturity date. It’s also free to open a CIT Bank account and create checking and savings accounts.
The CIT Bank CD is straightforward. You select your CD, make the minimum opening deposit, and then access your money again when the CD matures. Once a CD matures, you can decide to roll the funds into a new CD or move the cash into a checking or savings account.
- 3.50% APY
- $1,000 minimum opening deposit.
- No penalty to access funds if needed before maturity
- No opening or maintenance fees
- Daily compounding interest to maximize your earning potential
- FDIC insured
CIT Bank CD features
Term CDs
CIT Bank offers several term CDs with competitive rates and terms. These CDs let you secure a rate for a prolonged period of time, but you will have to contend with early withdrawal penalty fees if applicable. These are the choices:
- 6-month CD: 3.00% APY
- 13-month CD: 3.50% APY
- 18-month CD: 3.00% APY
- 1-year CD: 0.30% APY
- 2-year CD: 0.40% APY
- 3-year CD: 0.40% APY
- 4-year CD: 0.50% APY
- 5-year CD: 0.50% APY
If you want to get a CD with CIT Bank, make sure you choose a CD account with a shorter term length. CIT Bank CD rates aren’t as competitive once you venture beyond 18 months. Even then, it’s possible to find CD rates above 4.00% APY from other online banking platforms. CIT Bank CD rates are still above the national average.
No-Penalty, 11-month CD
This CD is perfect for people who want to benefit from CDs without feeling as if their money is inaccessible during the term. If necessary, you can withdraw funds from this FDIC-insured account before it matures without incurring any fees.
This no-penalty CD also comes with zero opening or maintenance fees. You must make a $1,000 minimum opening deposit to get started with this CD. It currently has a 3.50% APY.
Jumbo CDs
These aren’t the best CD options, and most people won’t qualify for them anyway. You have to make a $100,000 minimum opening deposit to end up with up to 0.50% APY. You can get a better rate with CIT Bank’s term CDs instead of opting for a jumbo CD that has a higher minimum opening deposit.
These are the available jumbo CDs:
- 2-year jumbo CD: 0.40% APY
- 3-year jumbo CD: 0.40% APY
- 4-year jumbo CD: 0.50% APY
- 5-year jumbo CD: 0.50% APY
You can find better rates with high-yield savings accounts and money market accounts. You can access a jumbo CD and other CIT bank accounts 24/7 with the CIT Bank mobile app. Jumbo CDs do not come with any monthly fees.
Banking features
eChecking accounts
CIT offers online-only checking accounts. The eChecking account only provides 0.10% APY for balances below $25,000, and 0.25% APY for anything higher. There is no minimum balance but you’ll need $100 to open the account.
Savings accounts
The CIT Bank Platinum Savings account offers up to 5.00% APY if your balance exceeds $5,000 while its Savings Connect account offers 4.65% APY. Meanwhile, the Savings Builder account offers 1.00% APY.
Money Market account
CIT Bank’s money market accounts offer simple interest with a 1.55% APY and no monthly service fees.
- 3.50% APY
- $1,000 minimum to open
- No account opening or maintenance fees
Who are CIT Bank CDs best for?
Risk-averse consumers
CIT Bank CDs cater to individuals who don’t want to endure the volatility of the stock market. Some people prefer to earn a guaranteed return on their capital rather than putting their money into stocks and ETFs.
Online banking aficionados
CIT Bank does not have any physical branches. You must be comfortable with using online banks and reaching out to customer support if you have any questions.
Retirees
Retirees often put less of their money into the stock market since they don’t have as much time to recover from market corrections. A CIT Bank CD offers a viable way to earn a return on your investment without risking serious downside.
Who shouldn’t use CIT Bank CDs
Investors who have high risk tolerances
Investing in the stock market can lead to much higher total returns than a certificate of deposit from CIT Bank or any other financial institution. If you are younger and have a higher risk tolerance, it may make more sense to put your money to work in the stock market.
People who want to access their money at any point
Most of CIT Bank’s CDs have early withdrawal penalty fees, with the 11-month no-penalty CD serving as an exception. However, you won’t have to worry about accessing your money at any point if you use a high-yield savings account or a money market account.
People who earn a high income
Interest from any bank account is treated as ordinary income for tax purposes. That means it will be taxed at your highest tax bracket. People who generate high income can end up with tax rates above 50% for their top dollar. While CIT Bank and other financial institutions post rates like 3.50% APY, the true rate you take home will look different after considering taxes and inflation.
Investing in other assets, such as stocks, comes with better tax advantages. For instance, long-term capital gains receive lower tax rates than ordinary income. Furthermore, qualifying dividends count as long-term capital gains if you hold onto your shares. Some assets offer better tax protections than others, and a CD is among the worst choices for people who want to minimize their taxes.
If you earn a high income but still want to invest in CDs, you can invest in a Roth retirement account through the backdoor method. You can then allocate some of the funds in your Roth retirement account into a CD.
- 3.50% APY
- $1,000 minimum opening deposit.
- No penalty to access funds if needed before maturity
- No opening or maintenance fees
- Daily compounding interest to maximize your earning potential
- FDIC insured
Pros and cons
Pros
- Receive risk-free returns
- Your account is insured by the FDIC
- Competitive rates
Cons
- You can earn higher returns in the stock market
- Interest gets taxed as ordinary income
- No physical branches
CIT Bank CDs vs. competitors
CIT Bank is one of the many financial institutions that offer competitive CD rates. However, some banks are better than others. Here’s how CIT Bank compares with Capital One and SoFi.
CIT Bank CDs | Capital One CDs | SoFi Vaults | |
Maximum APY on CD accounts | 3.50% APY | 4.50% APY | 4.50% APY |
Physical branches | No | Yes | No |
Minimum opening deposit | $1,000 | $0 | $0 |
Capital One
Capital One showcases its 1-year, 2-year, and 5-year CDs which have APYs of 4.50%, 4.00%, and 3.75%, respectively. These FDIC-insured accounts have competitive rates and do not have minimum deposit or balance requirements. You can decide whether you want to receive interest payments monthly, annually, or at the end of the term.
The bank has physical branches and a mobile app. While it highlights three CDs, the bank has CD terms that range from six months to five years. The lowest rate among Capital One’s CDs is 3.75% APY.
Capital One offers several financial products in addition to its CDs. Customers can open checking accounts, savings accounts, credit cards, mortgages, auto loans, and more accounts.
SoFi
The fintech company SoFi does not have any physical branches or CDs. The bank compensates with SoFi Vaults, which lets you receive 4.50% APY on your funds. There is no minimum opening deposit or monthly maintenance fees for this account.
You can only receive the highest APY if you receive $5,000 in direct deposits within 30 days. Your account will continue to be evaluated after every 30-day cycle to determine if you still qualify for the highest APY.
SoFi offers a wide range of financial products, such as an unlimited 2% cashback credit card, auto loans, student loans, personal loans, bank accounts, investment accounts, and refinancing. The online bank also has member benefits that allow customers to unlock exclusive perks, such as elevated cashback, discounts on products, and other benefits.
FAQs
Is CIT Bank a reputable bank?
CIT Bank is a reputable FDIC member that has been in business since 2009. The online bank is a division of First Citizens Bank.
Is a CD worth it?
A CD can be worth it for risk-averse investors who want a guaranteed, risk-free return on their money. However, inflation and taxes reduce the true return of any CD, making them less valuable for younger investors.
Can you get 5% on a CD?
It’s possible to receive 5% APY for a CD. Most of these CDs are offered by online banks that have fewer overhead costs and have more room in their budgets to support high APYs.
What is the biggest negative of putting your money in a CD?
Opportunity cost is the biggest negative of putting your money in a CD. You can generate a much higher return in the long run by investing in stocks or index funds. However, those investments also come with more volatility and risk, which doesn’t cater to everyone.
Do you pay taxes on CDs?
Yes. You will have to pay taxes on a CD. Interest is taxed as ordinary income, which is less favorable for people who earn high incomes. It’s important to consider your highest tax rate and inflation when determining the true return of a CD.
- 3.50% APY
- $1,000 minimum to open
- No account opening or maintenance fees
The bottom line
A certificate of deposit allows you to earn a risk-free return on your capital. CIT Bank offers competitive CDs with rates as high as 3.50% APY, but you shouldn’t venture beyond an 18-month CD with the bank. Its CD rates for 2-5 year terms are less competitive, especially when compared with other online banks.
The main advantage of CDs over high-yield savings accounts and money market accounts is that the APY is locked. You don’t have to worry about a Federal Reserve rate cut immediately impacting your interest income.
However, CDs aren’t perfect. The interest you receive is taxed, and it also has to keep up with inflation. Those factors can wipe out the real returns of some CDs, including the ones that CIT Bank offers. Furthermore, you can earn a much higher return by putting your money to work in the stock market, especially if you have a long-term horizon.
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Writer
Marc Guberti is a business freelance writer who specializes in personal finance, digital marketing, and entrepreneurship. His award-winning book "Content Marketing Secrets" teaches readers how to create, promote and optimize content for growth and revenue. Marc also hosts the "Breakthrough Success Podcast," where listeners learn how to master content marketing and get more clients.
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