The Basics

How is interest calculated on a Business Certificate of Deposit?

Interest on your Business CD is accrued daily and compounded monthly.

Is there a penalty for early withdrawal?

As with any CD, there is a penalty for withdrawal prior to the maturity date.

  • For a term that is 12 months or less the withdrawal penalty of three (3) months of interest will be deducted from your Business CD balance, regardless of when, prior to maturity, you make a withdrawal.
  • For a term that is longer than 12 months the penalty of six (6) months of interest will be deducted from your Business CD balance, regardless of when, prior to maturity, you make a withdrawal.

Depending on how early you redeem a Business CD, the resulting penalty may be greater than the interest that has been earned on the deposit.

Is the account insured?

Your CD deposits at Capital One 360 are FDIC insured up to $250,000 per depositor (keep in mind that the FDIC treats deposits owned by a sole proprietorship and by the individual associated with it as being owned by the same person). For all other Business Entities such as Non Profit, Corporations, LLC, and Partnerships the FDIC insurance is $250,000 per Business.

Capital One 360 is registered with the FDIC under the name Capital One, N.A. You can learn more at www.fdic.gov Opens a new window.

Terms & Conditions – Business CD

What is a CD Ladder?

A CD ladder helps you earn an even higher return on your savings. A ladder consists of multiple, sequential CDs all opened at the same time. Each "rung of your ladder" represents a different CD term and your ladder can contain as few or as many rungs as you like. For example, a ladder could consist of 12, 24, 36, 48 and 60-month CDs. Or for a less aggressive CD ladder, you could choose shorter terms such as a 6, 12, 18, 24 and 30-month ladder which keeps your money where you need it, when you need it.

Let’s say you have $10,000 to invest and want to start a 5-rung, annual ladder (12, 24, 36, 48 and 60-month CDs). You could invest $2,000 in each term. As each CD matures, re-invest the principal and interest into the longest term on your CD Ladder (in this case a 60-month CD). With this scenario, you’ll benefit by having at least $2,000 becoming available each year should you need access to your money, while at the same time having all your money in longer term CDs, which usually have a higher rate than shorter term deposits.

Can I receive interest disbursements from my Business Certificate of Deposit?

Yes. You can choose to receive interest disbursements on a monthly or yearly basis (on the anniversary date of the account opening). Interest disbursements can be sent to either a Business Savings Account or a verified external business checking account. You can select or deselect interest disbursement only within the first 20 days of account opening. If you choose to have interest disbursed, you can change the account where the interest is sent at any time.

What is backup withholding?

Backup withholding is when someone makes certain payments to you and you must withhold and pay 28% of those payments to the IRS. Payments that may be subject to backup withholding include, but are not limited to, interest, dividends and broker and barter exchange transactions.

If you provide your correct Social Security Number, make proper certifications and report all your taxable interest and dividends on your tax return, payments you receive should not be subject to backup withholding.

How do I update my backup withholding status?

Updating your backup withholding status is easy. Just follow these steps:

  1. Visit www.irs.gov Opens a new window or call the IRS at 1-800-829-1040 to obtain a W-9 Form
  2. Fill out and send in the W-9 Form to advise us of your updated withholding status
    • Fax: 1-877-464-4963, ATTN: Operations Research
    • Mail: Capital One 360, ATTN: Operations Research, P.O. Box 60, St. Cloud, MN 56302.

Your backup withholding status will be updated the day we receive the W-9 Form and funds will/won't be withheld beginning that month.

Please Note:

  • If your account(s) is jointly held and the joint holder needs to update their withholding status, they also need to follow the steps listed above.
  • To update backup withholding for a minor, a parent or guardian may sign their own name on the W-9 Form in place of the minor.
  • To update backup withholding for a Business Account, an Authorized Signer can complete and return the W-9 Form.
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