Quontic Bank CD

Quontic Bank is a New York based digital bank that is also a certified Community Development Financial Institution and a Minority Depository Institution, which means a defined share of its lending goes to underserved borrowers. Its CD line is small and easy to read: six terms, a $500 minimum, no monthly service fee, and interest that compounds daily and is credited monthly. Quontic's 3 month term pays 3.60% APY. From there the curve is inverted the whole way down: 6 months and 12 months both pay 3.50%, 24 months pays 3.15%, 36 months pays 2.85%, and 60 months pays 2.75%. In other words, the longer you commit, the less Quontic pays you. Anyone shopping Quontic for a multi year CD is being paid to take rate risk in the wrong direction. The early withdrawal penalty is the harshest detail here and it is easy to miss. For terms up to 12 months, the penalty equals the interest for the full stated term, not a fraction of it. Break a 3 month CD in month two and you hand back every cent of interest the CD would ever have paid, which turns a 3.60% APY into 0% and can dip into principal if interest has already been credited out. For 12 to 24 month terms the penalty is one year of interest, and at 24 months and over it is two years of interest. CDs renew automatically with a 10 day grace period after maturity. The 3 month CD suits someone with a firm, known date for the money, three months out, who wants a fixed rate and likes that their deposit funds CDFI lending. The $500 minimum keeps it usable for small balances, and FDIC coverage runs to $250,000 per depositor per ownership category. Skip it if the timing is soft. A full term interest penalty on a short CD can wipe out all of the interest, and a high yield savings account would leave you liquid for free. Skip the long terms outright, since paying 2.75% to be locked for five years when the same bank pays 3.60% for three months is not a trade any saver should take. And confirm the live rate on Quontic's application before you open one.