Did anyone notice that I’ve never done a review of a bank or its account offerings? Crazy right? I mean, I’m only the Angry Retail Banker. Well, it’s time to rectify that with this CIT bank savings account review!
And what a perfect time to talk about this bank. They are offering some of the highest rates in the American banking industry, and not by small amounts either.
Despite the slowly-but-maybe-steadily-I-think-but-who-knows rising Federal Reserve rates, we are still in a low interest rate environment. Which means that the money that we aren’t investing into our stock portfolios, real estate, and annuities needs to be left in a savings accounts with a competitive rate to at least stave off the negative effects of inflation.
A CIT bank savings account is the best place to do that.
Who Is CIT Bank?
CIT Bank is a subsidiary of CIT, a financial holding group that was founded in 1908. So yes, this is a company whose routes go back over a hundred years. And no, CIT Bank is not related to Citibank.
More importantly, they are an FDIC insured online bank offering the highest savings accounts out there today.
The average interest rate on a savings account is an anemic 0.06% APY. That’s really low, you might have noticed. For people who have tons of money and are willing to put their money into a 5 year CD (a horrible idea), the average rate is 0.90%
But why do banks offer such low rates? Well, for one thing, it’s because banks are expensive as hell to run and maintain. From compliance costs to services that you use daily to the branch network, there are so many expenses that banks have. Branches make up about 40-60% of the operating costs of most banks, and coupled with the low interest rates on loans, this means that offering anything over the bare minimum amount of interest means that your bank is operating at a loss. That’s why fees are such a big thing, by the way.
But CIT has no branch network. So that’s 40-60% less they have to spend on staff, computer systems, cash storage and security, mortgage/rent, and all the other stuff that goes into what are essentially super-expensive billboards. So they pass those savings onto you. They do so in the form of higher rates and no maintenance fees.
Why Open A CIT Bank Savings Account? Why Not Go With Another Bank? Or A Smaller, Local Bank?
Can’t you guys just make this easy for me and just do whatever I tell you?
Fine. Let’s tackle this problem in two parts.
First, CIT tends to have the highest rates. Higher than Ally, Capital One 360, Synchrony, and the rest of the big names in online-only banking. It’s not by much; it’s not like Ally’s offering 0.50% and CIT is offering 10% or anything like that. But every time I look at rates, CIT always seems to trump the others. Right now, Ally is offering 1.20% on their savings account. CIT? Well, you saw the image above and you’ll read more about the account in the next section, but let’s just say now that they have Ally beat.
Second, about those smaller banks. You might be thinking, “Well, there is a small regional community bank down the street. ARB, you taught me how to refinance my student loans with community banks, so I’ve decided to check them out and they actually have good rates too. And they have branches so I can withdraw my money and talk to a person face-to-face in case there’s an issue. So why would I deposit my money with an Internet bank when I have a perfectly good local bank right here that’s also offering a competitive rate?”
Valid question, naysayer. There are a couple of smaller banks near me that are offering 1.60% on 12-14 month CDs, which is certainly much better than the 0.25% my brick and mortar employer is giving its customers.
But here’s the thing: These banks are offering higher rates for much different reasons than the online banks are. They aren’t passing some sort of incredible cost savings down to you. They’re trying to shore up deposit capital.
Banks need to keep a certain amount of their deposit money on hand to satisfy withdrawals. It’s a ratio, not a hard dollar amount. So the more money in deposits a bank has, the more money they can lend out and earn a return on. These smaller banks, being smaller banks, have smaller deposit bases. Smaller deposit bases means smaller amounts being loaned out, and when coupled with the smaller profit margins that have come about with smaller interest rates, means smaller revenues for the bank.
So everything is smaller.
Essentially, they need desperately to attract new depositors and they do that by enticing you with good rates that will disappear the moment the bank has the money it needs to lend out. Now this doesn’t mean the bank is in trouble (though a bank that is in trouble will likely do this) and it doesn’t mean that your money is in jeopardy (your money with the local bank down the street is still FDIC insured). But it does mean that the rate you’re seeing on their signs is a temporary one.
With CIT Bank, on the other hand, their high yield savings accounts are going to stay that way for a long time. They are happily passing down their cost savings, not quietly scrambling to “order inventory”, so to speak, while hoping you don’t notice that they aren’t taking in the revenues they’re hoping for.
CIT Bank also has about 87 million awards and recognitions. American Banker, Bankrate, Huffington Post, and others have just been giving CIT award after award. You can check out the list of CIT Bank’s awards yourself. It gives you a confident feeling when it comes time to put your money in with them.
A Look At A CIT Bank Savings Account Itself
The main thing I want to talk about is the CIT Bank Premier High Yield Savings Account. Because that’s the best savings account I’ve seen in awhile.
As of this writing, CIT is offering a rate of 1.35% on this savings account. And despite it’s name, you don’t have to be some super rich Premier/Premium/Private/Gold/Advanced/whatever customer with six figure balances to afford this account.
The minimum is $100. There are no maintenance fees.
I’m not even going to scour the Internet to see what the brick and mortar banks are offering. I work at the brick and mortars, and I’ll tell you that the rates range from 0.01-0.05% on their comparable savings accounts that have maintenance fees! My dad has been on my grandmother recently to take her money out of an old account like this that was offering an APY of 0.03%.
You should know that once you get over the $250,000 range, your rate drops to 1.30% Weird, I know, but that really shouldn’t be an issue as you should never ever have that much money in a single account (due to the FDIC limit being $250,000). Frankly, most of that money should be invested anyway. Go buy a secondary market annuity if you’re looking for a guaranteed lifetime income stream.
And that’s really all I can say about a CIT Bank savings account. It has a high rate, it has no fees, and it has an extremely low minimum opening deposit. It’s exactly what a savings account should be.
The Drawbacks Of CIT Bank
Oh, of course y’all have to demand to know what the “catch” is. You know, I work hard to review quality financial products and services for you guys. The least you can do is not try to pick every tiny little thing apart.
Now, for the drawbacks of banking with CIT Bank? Well, to be honest, I really can’t think of anything other than the fact that they don’t have physical branches and that they don’t offer checking accounts. Wait, a bank that doesn’t do checking accounts? That’s weird.
Not having physical branches really isn’t that big of a deal. As a matter of fact, it’s what enables CIT to offer its main competitive attribute, which is those high savings account rates. They also require you to have an account with a brick and mortar bank, so you can transfer money between your CIT bank savings account and your primary checking account, though it can take a business day or two to become available.
By the way, if you ever see branches of OneWest Bank, that’s a subsidiary of CIT Bank. So they do actually have physical branches…..sort of.
As for it not offering checking accounts, well that doesn’t really matter. Truth be told, I don’t really see people flocking to CIT Bank for anything else other than their basic savings accounts. They do offer other deposit products such as CDs (including 1.45% on an 11 month CD which is pretty good), as well as home and business lending. But honestly, if you’re looking for a full service primary bank, then I don’t really think CIT Bank is for you.
Way back when, I published an article about why you should have an account with an online bank and I addressed these issues then too. In short, a CIT Bank savings account is perfect for parking your emergency money. You want your money liquid enough to be usable in an emergency, but just out of reach so that you can’t spend it on frivolous non-essentials. You want it to grow a little bit so that it’s not being completely eaten away by inflation, and you want to not have to worry about fees eating away at your account balance and leaving you with nothing when the time comes.
Sorry, everyone, no major drawbacks for us to go over.
I guess that means that you don’t have any excuses to wait. Unless you literally don’t have any money to save, open a CIT Bank savings account and start building or growing your emergency fund now. Before life’s next big emergency hits.
Readers–What do YOU think!? Where do you keep your emergency money? In CIT Bank, or somewhere else? Is your rainy day fund even in an Internet bank, or do you still use a brick and mortar bank exclusively? And for those who have or do use CIT, how has your experience with them been? Leave your thoughts in the comments below!
Disclaimer: Yeah, an affiliate disclaimer. Those links to CIT (except the page that details their awards) are affiliate links. Clicking on them and opening an account earns me a commission at no cost to you. But it’s at no cost to you! And you’re getting more money due to the higher rate. So it’s almost as if I were paying you to open an account! So why don’t you take advantage of these high rates and open your account now! Trust me, you’ll be glad you did.
SPECIAL OFFER: Earn $100 cash back for opening a Premier High Yield Savings Account by using the coupon code FALL17. Conditions apply, so make sure you check them out. Offer expires December 21, 2017.