CIT Bank – What They Promise, What They Deliver

by Neal Frankle, CFP ®

If you’ve looked at CD rates lately, you’re probably very disappointed and frustrated. I know many of the people I speak with feel that way. That’s why I decided to write this CIT Bank review.

You see, in an effort to earn higher rates on deposits, you might be looking online for better alternatives. And CIT is one online bank you might be considering. But can an online bank like CIT be trusted? Are they secure? Are they worth the extra interest they pay? Do they deploy any special tricks you need to be aware of? Those are the questions I’m going to address in this review.

Who is CIT Group?

CIT Group was founded in 1908 and is traded on the NYSE (CIT). When they began doing business over a hundred years ago they focused on making business loans and not much has changed since then. According to their website, they are a Fortune 500 company and they are on the Small Business Administration “SBA” Preferred Lender list. They have over one million business clients in over 30 industries. The online CIT Bank is owned by CIT Group.


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Like the other online banks I’ve written about, CIT is FDIC insured. That means that each depositor is insured up to $250,000. There are ways to increase your coverage but let’s just assume that the most you’ll keep in any bank – including an online institution is $250,000. This is going to be important later on so keep this number in mind.

As far as safety goes, their website is locked down pretty tight. The have taken great pains to make sure you are the only one who can login to your accounts. They have set up some sophisticated anti-virus programs, firewalls and encryption to keep your money safe. This is pretty standard for all banks these days so I didn’t get that excited to learn about it. And since hackers are pretty smart, there are no guarantees when it comes to online or brick and mortar banks. Just the same, it’s nice to know they take security very seriously.

Solvency

In 2009 CIT Group went through a Chapter 11 bankruptcy and emerged from that process within 40 days. Pretty quick. The bank was not part of that bankruptcy. But the FDIC had a cease-and-desist order in place from July 2009 through April 2011 keeping the bank from accepting new deposits during that time.

Of course that hurt the profitability of the bank and they did post a loss in the third quarter of 2011 but it did beat Wall Street estimates. Currently the bank has a four-star rating out of five from Bankrate’s Safe & Sound Star Ratings which is very good.

While I don’t think the bankruptcy is a deal breaker, I do think it’s very important to keep your deposit within the $250,000 FDIC guarantee limit if you decide to do business with them. But that goes for any bank these days. You just never know.

Service

Of course you can access your account information and transact 24/7 by phone or web. If you want to speak with a human being they also offer service 7 days a week. You can call until 9:00 p.m. (Eastern) during the week, 5:00 p.m. Saturday and 4:00 p.m. on Sunday. That’s convenient enough for most of us.

I called customer service and it was really refreshing. A real live person picked up the phone almost immediately and answered all my questions fully and completely. Ahhhhhhh……….

CIT Bank Fees

This is where things get really sweet. There are:

  • No monthly maintenance fees.
  • No incoming wire transfer fees.
  • No outgoing wire transfer fees if you have a daily balance of $25,000 or more.
  • No online transfer fees.

This is one time when you love to hear “no” from someone you are doing business with.

You can either let the interest compound or you can call the service center to get a check sent to you. Alternatively, you can have the interest sent to another institution (or to your home) automatically every month.

30 days before your CD matures, CIT will email you to let you know. If they don’t hear from you by email or phone 10 days prior to maturity they’ll renew your CD for the same term at the prevailing interest rate. They still provide another 10 day grace period for you to change your mind so you have plenty of access and time to shop rates elsewhere if you like.

Products

CIT offers a nice menu of savings options. In fact, this is where they really shine.

  • You can open an account with as little as $1,000 for a CD or $100 for a savings account. Interest compounds daily and they don’t charge any fees no matter how large or small your account is as I said above.
  • Some of the CDs even allow you to raise your rate and/or increase your deposit even after you establish the account. That’s flexibility and really valuable if you think interest rates are about to rise.
  • You can buy CDs with a 6 month, 1, 2 or 3 year maturity. Or, if you want to have more liquidity, use their CIT Savings account. This is always liquid and this is the only savings account I know of that still pays a decent return.

CIT Bank consistently has the some of the highest rates on FDIC insured CDs available. They compound interest daily and they credit your account monthly.

What are the penalties for early withdrawal?

Obviously there are no early withdrawal penalties if you take money out of your savings account. This is not a time deposit. But there are penalties for early withdrawals from CDs. Here is the schedule of penalties:

  • 3 months interest for the amount you withdraw from your account if it has an original maturity of one year or less.
  • 6 months interest for the amount your withdraw if your account has an original maturity of more than a year but less than three year.
  • 12 months interest for the amount you withdraw if the account has an original maturity of more than three years.

How to open a CIT account

The account opening process is very simple. All you need is your Social Security number, driver’s license and a check or bank account number to electronically transfer money into your new CIT Bank account.

It will take you about 10 minutes to open account. Here are the steps:

  1. Select what kind of account you’d like to open. They make this very easy to do because the show the rates and the minimum requirement on the menu. Couldn’t be easier. (See below.)
  2. Complete your application.
  3. Review and accept the terms and conditions. (Does anybody read these things….really?)
  4. Set up a few security questions.
  5. Fund the new account.

How to fund your account.

You can transfer money into CIT through an ACH transfer. Their account opening process walks you through this so you don’t have to be an Einstein to figure this out. They make it very easy. All you need to do this is a check from your other account.

You can also wire the money into your account or send them a check. Either way, all the information is on the site and this is a very straight-forward process. Once you open your account you’ll have 24/7 online access to review your account, view statements and see the recent activity.

Are there any restrictions on savings account transactions?

You can make up to six transactions per statement cycle. That’s a limit that is imposed by the Feds – not CIT. Sorry. But the good news is you can link up to 3 outside accounts to your savings account and you can even set up automatic deposits from your employer, pension or even Social Security. This feature will save you time and hassle.

The site says they place a hold on deposits for 5 to 10 days. This seems standard and appropriate. I don’t have a problem with this.

What bothers me about CIT Bank

While I really liked the service I got on the phone, there are a few things that disturbed me when I did my research. Some minor and some not so minor.

First, some petty stuff. The website doesn’t have a search function. That might be a small issue but it bugs me. It was a little harder to navigate the site because of that oversight and I don’t have that kind of time to waste. Again, not a deal breaker but I just needed to get that off my chest. Thanks for listening.

The bank does not take retirement or trust accounts. You can only open an account as an individual, open a joint account or a TOD (Transfer of Death) account. I have no idea why these restrictions are in place but they are. That limits your ability to really make use of this institution. And if you want cash, better ask your Uncle Ned for some green because this bank has no ATM network. Bummer.

Why most people love CIT Bank

The rates these people offer are excellent compared to the competition. Not only that, remember that they offer a CD that allows you to both add additional funds and adjust your interest rate (twice) in case rates go up. That sounds like a winner to me.

If you are looking for great rates & FDIC insurance CIT might be for you. If you compare CIT to other banks, it certainly has some impressive advantages.

Wealth Pilgrim Bottom Line

If you are looking for an easy place to park some CD money and want very attractive rates, this is a good option. If you are looking for a bank to provide more extensive services like checking and investment services, this is not a good fit for you. Likewise if you need to open a CD for a trust or retirement account – CIT is not your bank. Either way, make sure to never go above the FDIC insured levels no matter which bank you work with.

  • Application for a CIT Savings or CD Account

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