If that title gets you excited, you’ll be happy to know that more and more banks are offering 5% interest yield (or higher) on certificates of deposit (CD). CDs are a little less liquid than a straight savings account, which means there may be a penalty if you withdraw your money before that 12 month period is complete. But one year is not long to wait, and even if the penalty is 50% of the interest accrued, you’re still coming out farther ahead than you would have if your money remained in a typical savings account.
So here are a few recent deals that I found on bankrate.com:
* M&T Bank: 5.06% APY, $5,000 minimum.
* Mutual Bank: 5.05% APY, $1,000 minimum.
* Umbrella Bank, 5.05% APY, $1,000 minimum.
* GMAC Bank, 5.00% APY, $500 minumim.
* KeyDirect, 5.00% APY, $5,000 minimum.
* Corus Bank, 5.00% APY, $10,000 minimum.
The latest interest rates for the highest-paying savings accounts are here. Speaking of which, Virtual Bank just leap-frogged and is now offering 4.60% APY on their money market account.
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{ 6 comments… read them below or add one }
The pain is all in the first step of the ladder, once you start the laddering of CDs process it’s not as bad to put money in. Coming up with $5,000 for one step of the ladder can be a little much though. :)
Jim’s right – it is a tough first step. I’ve been a little weary of CD’s because i’m trying to stay reasonably liquid, but 5% makes these CD’s rather tempting.
Happy to see VirtualBank finally getting back into the game with their 4.60% MMA.
In addition to raising their MMA, they also raised their CD rates. Their 1-year CD is now 5.10% APY. The only bad thing is a $10K min.
Even though their MMA rates have lagged before this, they’ve done a good job at keeping the CD rates competitive. That’s the main reason why I opened a money market account last year. It makes it easy to fund the CD.
With their high MMA rates, CD rates and a referral bonus better than ING, they’re going to give ING, HSBC and Emigrant a run for their money.
Is the (roughly) quarter-point in interest worth losing the liquidity of the savings and money market accounts?
That would be something for an individual to decide. If the money is just parked in a savings account but the individual has enough of an emergency fund to leave as cash, there would be no reason not to move the funds into a CD. If it’s only $1,000 that’s already sitting in a high-interest savings or money market account, it’s probably not worth the effort.
If nothing else, do the ladder with $500 each to start. Plus, your money isn’t stuck there forever (impossible to withdraw) so it’s semi-liquid if you really do have a dire emergency…