Like many certificates of deposit (CDs), Marcus by Goldman Sachs High-Yield Certificates of Deposit are a low-risk way to grow money. CDs, in general, offer a guaranteed return, and they tend to have higher interest rates than a savings account or even a high-yield savings account.
CDs generally do, however, have a lower rate of return than investing in the stock market. People who open a CD either use it as part of a low-risk element of a diversified portfolio, or as the dominant position in a conservative portfolio.
CDs do have other limitations as well. Primarily, you have to leave your money in the CD for the length of the term, or you will have to pay a penalty. If you think you will need access to your money in the shorter-term, a CD might not be the right option for you.
Marcus by Goldman Sachs Overview
Marcus is the online bank under Goldman Sachs. Marcus was created as a technology-driven, low-cost financial option to compete with the growth and popularity of online-only banks. Banks like Marcus save on the overhead costs associated with brick-and-mortar banks. They theoretically pass those savings onto customers in the form of lower fees and better interest rates.
Marcus defines its objectives as offering value and transparency to customers, as well as keeping the digital banking experience simple.
Marcus CD Rates
The following are some of the CD rates available from Marcus right now:
|Term Length||CD Rate (APY)|
Eligibility Requirements & Minimum Deposit
To open a CD account with Marcus, customers need to have an initial deposit of at least $500. For someone who doesn’t have a minimum opening deposit of $500 or doesn’t want to open a CD, Marcus offers a High-Yield Online Savings Account, which doesn’t have a minimum deposit required to open it, and only $1 is required to earn the advertised APY.
A Marcus CD can be funded in a variety of ways. Ways to fund a Marcus CD account include:
- Transferring funds from a linked external bank account
- Transferring funds from a Marcus savings account
- Sending a wire from another bank
Minimum Balance Amount to Earn APY
With the Marcus CDs, the minimum balance to earn interest is $500, and this is also the minimum opening deposit. Your Marcus CD account may be closed if you don’t fund it with at least $500 within 30 days of opening it.
If you open a Marcus CD account and deposit at least $500 and the interest rate increases on the Marcus CD products within 10 days of that opening, you will receive the new higher rate.
Early Withdrawal Penalty
When a CD reaches its maturity date, Marcus customers have a 10-day grace period. They can withdraw the principal without a penalty during this time, or renew the CD with the same terms. Customers can also close that CD and open a new one with new terms. If you don’t contact Marcus within 10 days, your CD automatically renews for another term.
Marcus CDs also come with several fees and penalties for early withdrawal:
- If the CD term is less than 12 months, the early withdrawal fee is 90 days’ worth of simple interest on the principal at the rate of the CD
- For CD terms of 1 to 5 years, the fee is 270 days of simple interest on the principal at the effective rate for the CD
- For CDs with terms of more than 5 years, the early withdrawal fee is 365 days of simple interest on the principal, on the CDs effective rate
Investors have 30 days to add more money to a CD once it’s been opened. Marcus lets customers fully fund their CD within 30 days of account opening, but after that time there isn’t the option to put more funds in the account.
Pros of Marcus CDs
The pros of the Marcus CD account option are that the rates are very competitive, and the CDs are offered in a wide variety of terms. Shorter terms like six months can be appeal to someone who wants to earn a competitive APY, but still have access to their money in the relatively near future.
The CD rate guarantee also helps ensure that people are getting the highest offered rate. Along with excellent rates and shorter terms, the minimum balance to open a CD is relatively low.
For most consumers, a major drawback of Marcus CDs is the fact that they automatically renew after terms expire. If you have longer terms and you remove your funds during the grace period, your money can be stuck for that term or incur an early withdrawal fee.
Marcus CDs are best for people who want to earn more interest on their cash than they would holding it in a savings account, but who do not need to access that cash in the near term.
>> Read More: Best CD Rates
Marcus CD rates are among the most competitive available, particularly for longer terms. There’s a low barrier to entry thanks to the $500 minimum deposit and there are numerous term options available.