Best CD Rates

Certificates of deposit, or CDs, are a popular, low-risk method of investment, and finding the best CD rates will help you get the most from your money.

Some Facts About CDs

A certificate of deposit is a bit like a savings account. You deposit a sum of money in a bank or credit union, and the financial institution pays you interest while it holds your money. Like savings accounts, CDs are also insured by the FDIC or NCUA. Unlike savings accounts, you must keep your money in the CD for a set length of time. The length of time you must invest your money in a CD is known as the term. Longer terms typically result in higher interest rates. However, a lengthy term means your money is inaccessible for that much longer, a concern for some investors. There will also be a deposit minimum when you open a CD account, ranging from $500-$100,000. There are two rates to consider when comparing certificates of deposit - the flat interest rate, and the Annual Percentage Yield (APY). The APY has been used for all percentages mentioned below.

1.

 AmTrust Direct offers the best CD rate with 5.46% on a 6-month CD. Even their 12-month CD only drops a few hundredths of a percent to 5.41%. Both CDs require a relatively low minimum deposit of $1,000.

2.

 ING Direct offers a CD rate of 5.10% for a 12-month CD. Other terms range from six months to 60 months, resulting in rates of 4.75% to 5.00%. ING Direct is notable for being a bank with a solely online presence.

3.

 Chase offers 5.10% on a 7-month CD. However, it requires a minimum deposit of $10,000. Other CD rates, including those only requiring a $1,000 minimum deposit, range from 4.00%-5.00%.

4.

 While most CDs require you to pay a penalty if you withdraw your money before the end of the term, Bank of America's "Risk-Free" CD allows you to remove your money from the CD at any time with no penalties. With a CD rate of 4.45%, this flexibility will make giving up a few tenths of a percent in interest worthwhile for some investors. Bank of America's more traditional "High-Yield" CD clocks in at a respectable 5.00%, with a $10,000 minimum deposit.

5.

 U.S. Bank offers a special online rate of 5.15%, but it requires a minimum deposit of $40,000. Other rates range from 4.75% to 5.00%, depending on whether you invest for five or 15 months, and if you make a minimum deposit of $1,000 or $40,000.

6.

 Citibank offers a 6-month CD with a rate of 5.00%. Other CDs feature terms from three months to five years, with rates ranging from 3.75% to 4.75%.

7.

 Fifth Third Bank offers a promotional rate of 5.20% on a 7-month CD. Other rates fall on the lower side, ranging from 3.5% to 4.25%, although CDs are available with terms as short as seven days, allowing for more flexibility.

8.

 Well Fargo offers "featured rates" approaching 5.00%, depending on your state of residence. Outside of these specials, however, rates hover in the mid-3% range.

Of course, a listing like this favors national banks with widely published interest rates. Your local credit union or small-town bank may offer a comparable rate. The best CD rates can also vary from day-to-day, let alone from week-to-week or month-to-month, so you should find out the most recent rates before making an investment based on the information presented here. It pays to research your choices carefully before investing in a certificate of deposit, or any other financial product.

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