When opening a CD it is extremely important that one understands the difference between variable interest rates and fixed interest rates. The interest earned based upon the CD interest rate can vary because the power of compounding interest makes the profit from daily, weekly, monthly, quarterly, or yearly compounding different. The more money that is invested, the more that this interest rate makes a difference. If rates fall while one is already invested in a certificate of deposit then this is a win since one is earning a higher rate than others that are opening new certificates (CD). If CD interest rates go the opposite way then it can be looked upon as an opportunity to purchase an additional CD at this higher rate. There are usually policies in place that allow one to end a CD term prematurely however there is almost always a penalty involved. Some banks do offer promotions and special Certificates of Deposit (CD Rates) without any penalties but this is somewhat rare. A Jumbo CD, which is a bank deposit certificate of at least $100,000, usually earns higher rates than normal non jumbo CDs. Just like the stock market, it makes sense to difersify one’s investments in different banks since FDIC insurance is currently at $250,000 maximum coverage per depositor per bank. FDIC insurance will drop back to 100,000 of coverage in 2013.
When obtaining any interest yielding bank account one should be concerned that all banks constantly review and change interest rates. Because of this active involvement, interest rates change often and can go up and down whenever the banks decide. The initial rate that one signs up for can only be valid for a short period of time depending on the type of account that is acquired. Banks that have great online portals will offer a plethora of banking services to meet the demands of the most particular consumer. Some services offered can include payment of creditors via check by mail (this is common with US Bank accounts), credit card accounts, stock and brokerage accounts, and stock trade accounts. If one needs the services of a human teller as opposed to an Automated Teller Machine, or ATM, then there is definitely a possibility that the user will be charged. Many banks now have built in stipulations that limit the use of normal bank tellers to compensate for high cost of labor. Going over this limit will usually incur a fee. The bank also may offer low fee or no fee checking accounts that are limited to 10 or less transactions per month. These transactions can be withdrawals, writing a check, making a purchase with a debit card, and even ATM withdrawals. Checking the number of transactions that one may be limited to in a single month is a smart move. Check out several local banks to compare the difference between online banks and traditional banks. Some banks even offer discounts to owners of their stock. This can be a money saving opportunity for the right investor.
Internet banks, banks without any retail bank branch locations such as ING Direct, usually do not own any ATMs so one may have to repay surcharges for cash withdrawals. Be aware that not all banks do this. ETrade for example will pay the customer’s ATM fees for maintaining a minimum balance in their online checking account. This type of ATM transaction involves two parties: the withdrawer’s bank and the ATM owner. Both banks preserve the right to charge fees so one may encounter a double whammy if not prepared to pay the fees. There is no need to bank with small internet banks that are do not carry FDIC insurance. Any doubt of coverage can be confirmed at the FDIC website. Money in a bank is safe when the bank has federal insurance for the funds of it’s customers. Making money off of interest is smarter than stashing the cash away under a mattress.
Back at the top of the list of highest certificate of deposit interest rates is Aurora Bank FSB. Their 12 month CD rate is at 1.56% APY which is way higher than INGDIRECT’s 1 year CD rates of 1.00% APY. American Express Personal Savings is right behind Aurora Bank rates at 1.50% Annual Percentage Yield. Aurora Bank also offers Roth IRA accounts, checking accounts, and home mortgage loans.
Amtrust Direct Bank has top CD rates on their 12 month CD. All you need is at least $1,000 for the inital minimum deposit. The interest paid on this short term investment is 1.70% APY, 1.686% is the actual interest rate.
AmTrust Direct, the online banking division of AmTrust Bank, also offers a Premium e-Money Market investment account that pays out a great interest rate of 1.25% APY on balances between $10,000 and $150,000. Here is the list of the all money market rate tiers:
|Money Market Acct Balance
|$1.00 – $999.99
|$1,000.00 – $9,999.99
|$10,000.00 – $24,999.99
|$25,000.00 – $49,999.99
|$50,000.00 – $149,999.99
|$150,000.00 – $249,999.99
|$250,000.00 – $499,999.99
The AmTrust Direct Money Market Account is similar to normal online savings accounts since transfers to and from external accounts are all made online. They don’t charge any maintenance fees (no minimum balance fee) and this money market account is FDIC insured. Just like any other savings account you can watch your money grow with scheduled direct deposits for added convenience.
AmTrust Direct Contact Info:
Customer Contact Center (888) 228-8146
Monday-Friday 7am-12am ET
Saturday 8am-9pm ET
Sunday 8am-6pm ET
Open a new investment account at AmTrust Direct
The current top 1 year bank CD rates can be found at Ally Bank. They are offering super high CD interest rates of 2.80% APY on 1 year certificates of deposit with absolutely no minimum deposit required.
Ally Bank is a new name to the banking industry however they are really just the new face of GMAC Bank (General Motors Automotive Credit). GMAC Bank has been offering very high bank CD rates recently so it is no surprise that they are offering such a great interest rate.
Washington Mutual Bank is offering online certificates of deposit for 12 months at 1.74% annual percentage rate, 1.75% annual percentage yield. The APY takes the effect of “compounding interest” into account. This is an online CD rate and local branches may have different interest rates.
WAMU Bank was acquired by JPMorgan Chase on September 25, 2008.
GMAC Bank has the highest 1 year CD rates at 2.81% APR, 2.85% APY. If you’ve been paying attention to investment product interest rates then you’ll know that this is one of the best certificate of deposit rates around.
Interest is compounded daily however there is a fee for early withdrawal that could outweigh the interest earned. There is a required minimum opening deposit of $500 dollars.
GMACBank also has online savings accounts and online money market accounts. Money market account rates are decent at 1.98% APR, 2.00% APY. GMAC Bank savings account rates are also high at 2.47% APR, 2.50% APY. Money market accounts and online savings accounts are a better choice for those that need instant access to their money since there are no early withdrawal fees.
The market is doing better. Bank CD rates at HSBC Direct are high at 2.30% annual percentage rate for 12 month certificates of deposit. Online banking at HSBC direct is easy-just link up an external account and make electronic transfers online. No need to ever step into a HSBC bank branch. This is an online CD rate and it is not available at local HSBC banks.
HSBC Direct’s parent, HSBC Bank USA, N.A. has over 10,000 offices across the globe. They also have almost four hundred fifty traditional bank branches in America.
The minimum opening deposit for this C.D. account is ten dollars. Although money can be made in interest with a certificate of deposit it is possible to lose money since HSBC Direct can impose a fee on early withdrawals.
HSBC Direct offers a variety of deposit products including online savings. High yield online savings rates can often be higher than CD rates but they can change frequently (there is no guarantee unlike a CD which is a time based deposit.) HSBC Direct current online savings rates are at 1.85% APY. It only takes one dollar to start earning a return on your investment at HSBCDirect and there is no monthly minimum so there are no fees for this savings acct.
iGObanking.com is offering certificates of deposit for a 1 year term at 2.23% Annual Percentage Rate, 2.25% Annual Percentage Yield. This is a good rate for a safe and government insured investment and the minimum deposit is only one thousand dollars. Interest earned from investments at iGObanking is compounded daily and added to the account on a monthly basis.
iGObanking is an online bank with no traditional bank branches. iGObanking customer service can be reached by phone from Monday to Friday from 9:00 am to 5:00 pm and Saturday from 9:00 a.m. to 3:00 p.m. Eastern Standard Time at (888)-432-5890.
EverBank, originally from Jacksonville, Florida, has highest CD rates for 1 year CDs at 2.65% APY. This high yield CD has a minimum of 1500 dollars and is a has a much higher interest rate compared to ING CD rates. EverBank calls their normal CD’s Yield Pledge CD.
EverBank also has other types of non standard certificates of deposit:
The Market Safe CD from Ever Bank is different from a normal certificate of deposit since it pays an unknown return. The “interest” earned at maturity of a MarketSafeCD is based on the performance of a selected reference index. A simpler way to put it is that the investment bank is placing the money in other investments that are subject to market risk. The returns can be greater than a traditional certificate of deposit however a return is not guaranteed therefore one could receive only the initial deposit back at maturity. This MarketSafe CD is FDIC insured so the investment is protected against bank failure. Ever Bank does not currently offer this CD online.
EverBank has a bunch of World Currency CDs for investment in foreign banks and funds. There is a wide range of countries to choose from Europe to South Africa. These certificates of deposit are subject to different risks since these CDs deal with international markets.
The InsuredAdvantage Certificate of Deposit from Ever Bank is a CDARS CD account that provides FDIC insurance coverage for investments up to 50 million dollars. EverBank’s current CDARS rate is 2.17% APY on a 1-Year CD. This is a particularly high yield interest rate considering the insurance coverage provided. CDARS CD accounts are typically ideal for those with investments over the FDIC coverage limit which is currently 250 thousand dollars per investment account depositor.
INGDirect has 1 year CD rates at 2.00% APY. Not the best CD rates out there right now however they have a good online interface and have been in business for years. Ing direct differs from normal banks since there are no retail bank branches at all. All banking transactions are completed online only via electronic transactions. An existing external bank account is needed to do business with ing direct.
ING Bank, fsb is headquartered in Wilmington, Delaware.
Advanta Bank Corp. has best bankrates on 1 year CDs at 2.76% APR, 2.80% APY. This is a very high yield CD. Oddly enough Advanta Bank has 1yr jumbo CD rates at 2.70% APR, 2.70% APY – LOWER than their normal CD rates.
Highest Bank CD Rates
Advanta Bank’s headquarters is in Draper Utah:
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Highest CD Rates from E-LOAN
High certificate of deposit interest rates for 1 yr CD’s
at 2.72% APR, 2.76% APY. 1 yr jumbo CD rates
are also at 2.76% annual percentage yield.
Eloan has additional CD maturity lengths: 1 Month CD, 2 Month CD, 3 Month CD, 6 Month CD, Month CD, 1 Year CD, 18 Month CD, 2 Year CD, 3 Year CD, 4 Year CD, 5 Year CD, 6 Year CD
- $10000 minimum opening deposit
- FDIC insured up to $250000 per account holder
E-LOAN, an online investment bank, is a wholly-owned subsidiary of their parent company Banco Popular North America (BPNA).
discover bank has top 1 year CD rates at 2.75% apy. deposit $2,500 (discover bank’s minimum to open a CD account) and get $568 bucks in interest when this 12 month certificate of deposit matures.
discover bank will automatically renew all cd accounts unless the account holder has notified them otherwise. They do have a 9 day grace period. during this time the certificate of deposit account holder can close the cd or add money to increase the investment and earn more money. the cd interest rate earned on the renewal will be subject to current rates and will probably be different from the original interest rate.
discover reserves the right to charge the following fees on all certificate of deposit accounts if applicable:
- Coping a Statement Copying a Check, or Copying a Deposit Item:$5.00
- Converting a Foreign Check:Actual Cost
- Sending anything Priority Mail:$20
- Domestic Wire Transfers
- International Wire Transfers
discover bank has cds ranging from as little as 3 years to as long as 10 years.
jumbo cd rates are the same as normal cd rates at discover. the FDIC insures deposit accounts up to $250,000 per depositor through the end of 2009. They’ve also got a cool ATM locator feature on their website.
Hudson City Savings Bank Online has a great CD rate of 3.0% APY for 1 year CD’s.
$5000 minimum deposit required.
Hudson City Savings Bank is headquartered on the East Coast and has over 125 traditional bank branches with over 1300 employees. Their online division offers high CD rates.
A CD, short for certificate of deposit, is a time based investment that is offered by commercial banks and credit unions. The fundamental difference between CD’s and savings accounts is that savings accounts allow withdrawals any time whereas CD’s must be held for a specified time until maturity.
Compare CD and Savings Account Interest Rates
CD interest rates tend to be higher than savings account interest rates. CD maturity can range from a few weeks to over 10 years. The annual percentage rate (which directly affects the annual percentage yield) is usually different for different CD Terms. A longer term CD doesn’t automatically mean that the interest rate will be higher. Certificate of deposit interest rates are calculated by financial analysts at each financial institution so the CD rates offered by different banks are often quite diverse. Comparing CD rates is essential to investors looking to make money with an extremely safe investment product.
Are CD’s Safe?
This depends on where the certificate of deposit is purchased. Many online banks appear to have come from nowhere but many of them are simply the online division of an existing bank. Ensure that the bank is a member of the FDIC for free insurance from the government in the event of a bank failure. The FDIC has been stepping in and taking over many banks after bank failures in 2008 and 2009. There are limits to FDIC insurance.
Financial Institutions offering CDs sometimes have minimum deposit requirements. It can be as little as one dollar or as high as sever hundred thousand dollars. A jumbo CD refers to a certificate of deposit with a $100000 minimum deposit necessary to open the account.
Electronic banking with an online bank requires a preexisting external checking or savings account. This account is linked up with the new online account so electronic transfers can be made between the bank accounts.
Online banks classically use electronic monthly statements. These statements are often available in PDF (portable document format from adobe) for online viewing and printing if necessary. Yearly tax information is often available online and mailed to the primary account holder. Interest earned from investment products such as CD’s, online savings accounts, and online money market accounts must be reported to the government since the interest is taxable (both state and federal). Running reports on online activities can be useful in analyzing the performance of an investment portfolio.
Fees and Penalties
Certificates of deposit are time investment products. Money is held for a fixed time by the offering financial institution in return for interest paid to the cd account holder. More often than not banks will charge an early withdrawal fee or penalty if the money invested in the cd is needed before the cd matures. If liquidity is required then a money market account, high interest yield savings account, or interest bearing checking account may be a better choice.