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5% APY on 12-Month CDs!

This article was written by in Saving. 6 comments.

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.

Published or updated February 15, 2006. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.

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About the author

Luke Landes is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about Luke Landes and follow him on Twitter. View all articles by .

{ 6 comments… read them below or add one }

avatar jim

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. :)

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avatar Will Kirby

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.

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avatar Ken

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.

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avatar JR

Is the (roughly) quarter-point in interest worth losing the liquidity of the savings and money market accounts?

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avatar jim

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…

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avatar Luke Landes

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.

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