Bought Some More 5% APY Bank CDs From WaMu/Chase

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I went ahead today and bought some more of the 12-month CD at 5% APY from Washington Mutual/Chase. Here’s why:

Reason #1: Chase agreed to honor WaMu CD rates
From the official FDIC WaMu takeover page:

6. Will I continue to earn interest at the same rate?
JPMorgan Chase accepted Washington Mutual’s interest bearing accounts including CD’s at the contract rate; therefore, they are not waiving early withdrawal penalties.

Even though there was speculation that Chase would only pay interest up to the failure date as was the minimum requirement, Chase went as far as to not even allow early withdrawals without penalty. They have committed to honoring these rates, which also worked out great for those that jumped on it last month.

Reason #2: They are still offering the 5% APY 12-month CD
A week later, the same high rate is still on their website:

This can’t have been an accident. 13-month CD is available too.

Reason #3: It’s FDIC-insured, now with a more stable bank
For those that worried about WaMu service interruption or lost liquidity (which never happened) , now it should be even more stable with Chase Bank.

Reason #4: It’s still a top rate, and it might change at any time.
Maybe there is some sort of behind-the-scenes rate freeze agreement that we don’t know about. Their popular Online Savings + Free Checking combo is still paying 4.00% APY on savings and the checking perks haven’t changed (WaMu review). Savings accounts at any bank are always subject to change, so there is nothing I can do about that. But I can sure lock in this rate now and keep my system going as long as possible:

Reason #5: Fed may drop interest rates soon
Bailout plan or not, this economy ain’t doing so well. Although I don’t make big bets on such forecasts, there is a good possibility that Fed will lower interest rates by the end of the year (see USA Today, WSJ).

If your funding source is not WaMu, they let you fund electronically with another bank’s routing and account number. You have to remember to verify the test deposits, though.

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  1. Luke @ Money & Fitness says

    Can Chase decline the numbers that WaMu was giving at the end of their time? If so, I’d be curious how that works.

  2. I just went and opened 2 CDs today at WaMu, and saw your post. Couldn’t agree more – this is the best time to put some savings into the 5% CD.

  3. Luke – I believe they could have, but they didn’t. If they aren’t waiving early withdrawal penalties, then they must honor existing CD contracts.

    With IndyMac, you could either keep the CD to the end of term, or withdraw with no penalty.

  4. What about this?

    Q: I bought one of WaMu’s one-year certificates of deposit with a 5% rate. Will I still receive that rate until the CD matures?

    A: At a press conference call on Friday, Charlie Scharf, head of JPMorgan Chase’s retail business, said rates for WaMu products will remain the same “as we figure out how to merge the companies.” But it’s unlikely that Chase will honor the rate on WaMu’s 5% CD through maturity, says Greg McBride, senior analyst for Last week, the average rate for a one-year CD was 2.45%, according to

    If Chase decides to lower the rate on WaMu CDs, customers will have the option of holding on to their lower-paying CDs until maturity or redeeming their CDs without paying an early-withdrawal penalty, McBride says.

  5. Invest0r – Thanks for sharing that article. I don’t know the future, but I will say that the speculation is from a guy from Bankrate, though, and not from anyone from Chase.

    As of early Friday, the FDIC website also stated “JPMorgan Chase Bank will be reviewing rates and will provide further information soon.” But on late Friday it was changed to the current “JPMorgan Chase accepted Washington Mutual’s interest bearing accounts including CD’s at the contract rate; therefore, they are not waiving early withdrawal penalties.”

    I don’t know when this article was written (posted 9/28), but the quote from the Chase guy was on Friday.

    One would think a week would be long enough to make at least a general decision on rates. In the meantime, I’ll be crossing my fingers 🙂

  6. Crossing my fingers as well. Though I’m fairly confident JPMorgan will not adjust rates on current holdings. A lot of people will withdraw their funds if they do.

  7. Does this apply to new customers too. I do not have accounts with WAMU or Chase (except credit cards). Can I still open online CDs. The chase site does not have this offer and WAMU online shows this even for my region.

    What do you think?

  8. On the bright side, you really risk nothing by trying to get the higher rate.

  9. I work for JPMChase and can tell you they are very interested in maintaining the customer base. We all got an e-mail from Charlie that basically said “focus on the customer”.

    I also think they’re trying to get ATM fees by the end of the week. We’ll see how that goes.

  10. I don’t know. Why would you think interest rates would be going down when we are going to have some kind of credit crunch? I mean, if it’s going to be too expensive to borrow soon — doesn’t that mean interest rates are going up?

  11. I too dove in yesterday, although for the 8 month term. I used cash from a 0% credit card rollover as well as a portion of my emergency fund (not expected to be needed in the next 8 months of course…)

    I have a nice pile of cash sitting in my Roth 401K MM account, but WaMu does not offer IRA CD’s in my state (Mass). I would have jumped at the 12 month 5% rate. I’m curious as to why they have different residency requirements for IRA CD’s???

  12. It’s strange how Chase has decided to keep the rates steady… Maybe they realize what will happen if they lower the rates?

  13. I did the same thing. I think Chase will honor WAMU rates to keep people from withdrawing money.

  14. Reason #6: FDIC insurance will soon increase to 250K with the new proposal. So to add to #3, its FDIC insured with a much stronger bank and the insurance amount will likely go up soon as well.

  15. HS@OurDebtBlog says


    We are all waiting to hear your opinion on the latest government bailout. Can you please do a post about the current crisis going on.



  16. klein3351f says

    JP Morgan won’t be making changes at WAMU until after the new year. They are changing branch names though, and soon to follow will be policies. You’ll be lucky if they live up to their word on CD rates through the next 13 months.

    The only people who know what will really be happening are people who were already banking with JP Morgan. They don’t seem to be interested in maintaining the status quo at WAMU past the time where they can iron out all the details of the takeover for themselves.

  17. I agree that cash in short term money markets are best, especially during these volatile times. And while I like to think that these mega-mergers will help save the financial industry, they will also come back to haunt us when the markets get better.

    Fewer banks = less competition, possibly less services and lower overall competitive money market rates. Take these rates while you can.

  18. The FDIC taking over WaMu will mean the end of their free checking, savings, and money market accounts. They will start charging fees for everything like most other banks. Don’t you agree?

  19. Might also want to check out Vanguard’s tax exempt money market fund — the CA one is yielding 5.36% tax free…

  20. Chase bought out my student loan company. My student loan interest went up.

  21. Here is an article from CNN Money referencing this specific case:

    Looks like Chase will honor the rates determined before the failure.

  22. Online Saving rate dropped to 3% and Online CD rate for 12-month and 13-month dropped to 3% too

  23. Mine too, I got 12-month CD at 5% past weekend. Hope it wont be affected.

  24. Lucky you guys who got the 5% CD. I tried to get the 5% 1-year CD. Did the online application on 9/28/08. I did everything they told me to do–I verified the two little deposits the same day. However, WaMu would not transfer the funds. I have called repeatedly and customer service told me that I did everything correctly. Now it has been over 7 days without the funding in place and they will not give me the 5%, and they will not tell me what the new rate is until the CD has been funded. So I would be stuck at the lower rate for a year which I do not want. They told me that they would transfer this evening, so I removed the outside funding bank. I realize now that they really do not care and are not honorable to keep the contract. GOOD LUCK TO ALL WHO DEAL WITH THIS BANK!

  25. I saw your post and had to reply, did you all know you can get even higher rates with fixed annuities? Right now they are paying 7.2 for a fixed and up to 15% for an index. Plus there is an index life insurance that creates a retirement along with death and disabillity benefits.

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