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Compare CDs

Back in the day, the saying “a penny saved is a penny earned” applied to savings accounts. Today, with interest rates for savings accounts languishing in sub-inflation territory, it hardly seems worthwhile to maintain a savings account.  However, there are investment instruments that enjoy the safety and security of a savings account, but which yield higher returns. One such instrument is a certificate of deposit or CD.

Understanding How CDs Work

However, all CDs are not created equal. Some CDs are structured to serve as long-term investments and are suitable for inclusion in a retirement planning portfolio. Others function more like high-yield savings accounts.  CDs can be purchased from banks, credit unions, and investment brokerage houses. CDs from banks and credit unions are guaranteed against loss while CDs from brokerage houses can be traded much like stocks – and can lose money.

3-Month Annual Percentage Yield (APY)

The Annual Percentage Yield (APY) refers to the interest rate applied to an investment over a year’s time. APY is unique in that it takes compounding – the interest you make on the principal plus the accumulated interest -- into account. This is a major reason why APY, rather than Annual Percentage Rate (APR) is used to measure investment earnings.  The 3-month APY reflects the fact that CDs are often compounded, or rolled over, four times during the course of a year.

Minimum Deposit Amount

Like conventional bank accounts, CDs often have minimum deposit requirements.  In some cases, the minimum deposit amount is several thousand dollars. However, it is possible to find CDs with lower or no minimum deposit amount. It is also worth noting that there is almost no correlation between the minimum deposit amount and the APY.  Regular CDs are issued in denominations under 100,000 dollars; jumbo CDs are issued in denominations of 100,000 and above.

Deposit Term

All CDs carry deposit terms or the length of time required for a CD to mature. CDs with longer deposit terms tend to pay higher APRs. Deposit terms can be as short as a few months or as long as several years.  Naturally, CDs with longer deposit terms are better suited for long-term investments, such as retirement portfolios, while CDs with shorter deposit terms are ideal vehicles for generating earnings on funds while maintaining a measure of liquidity.

Early Withdrawal Penalties

While account holders are allowed to make withdrawals from savings accounts whenever they choose, withdrawals from the CD before the completion of the deposit term are often subject to early withdrawal fees. Early withdrawal fees are similar to the stiff penalties imposed by the IRS on early withdrawals from Individual Retirement Accounts, or IRAs.

Fees

 

One aspect where savings accounts differ from CDs is in liquidity. Where account holders are allowed to make withdrawals from savings accounts whenever they choose, withdrawals from the CD before the completion of the deposit term are often subject to early withdrawal fees. Early withdrawal fees are similar to the stiff penalties imposed by the IRS on early withdrawals from Individual Retirement Accounts, or IRAs.

Compare CDs

Back in the day, the saying “a penny saved is a penny earned” applied to savings accounts. Today, with interest rates for savings accounts languishing in sub-inflation territory, it hardly seems worthwhile to maintain a savings account.  However, there are investment instruments that enjoy the safety and security of a savings account, but which yield higher returns. One such instrument is a certificate of deposit or CD.

Understanding How CDs Work

However, all CDs are not created equal. Some CDs are structured to serve as long-term investments and are suitable for inclusion in a retirement planning portfolio. Others function more like high-yield savings accounts.  CDs can be purchased from banks, credit unions, and investment brokerage houses. CDs from banks and credit unions are guaranteed against loss while CDs from brokerage houses can be traded much like stocks – and can lose money.

3-Month Annual Percentage Yield (APY)

The Annual Percentage Yield (APY) refers to the interest rate applied to an investment over a year’s time. APY is unique in that it takes compounding – the interest you make on the principal plus the accumulated interest -- into account. This is a major reason why APY, rather than Annual Percentage Rate (APR) is used to measure investment earnings.  The 3-month APY reflects the fact that CDs are often compounded, or rolled over, four times during the course of a year.

Minimum Deposit Amount

Like conventional bank accounts, CDs often have minimum deposit requirements.  In some cases, the minimum deposit amount is several thousand dollars. However, it is possible to find CDs with lower or no minimum deposit amount. It is also worth noting that there is almost no correlation between the minimum deposit amount and the APY.  Regular CDs are issued in denominations under 100,000 dollars; jumbo CDs are issued in denominations of 100,000 and above.

Deposit Term

All CDs carry deposit terms or the length of time required for a CD to mature. CDs with longer deposit terms tend to pay higher APRs. Deposit terms can be as short as a few months or as long as several years.  Naturally, CDs with longer deposit terms are better suited for long-term investments, such as retirement portfolios, while CDs with shorter deposit terms are ideal vehicles for generating earnings on funds while maintaining a measure of liquidity.

Early Withdrawal Penalties

While account holders are allowed to make withdrawals from savings accounts whenever they choose, withdrawals from the CD before the completion of the deposit term are often subject to early withdrawal fees. Early withdrawal fees are similar to the stiff penalties imposed by the IRS on early withdrawals from Individual Retirement Accounts, or IRAs.

Fees

 

One aspect where savings accounts differ from CDs is in liquidity. Where account holders are allowed to make withdrawals from savings accounts whenever they choose, withdrawals from the CD before the completion of the deposit term are often subject to early withdrawal fees. Early withdrawal fees are similar to the stiff penalties imposed by the IRS on early withdrawals from Individual Retirement Accounts, or IRAs.

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Company

Reviews

12-month APY

Minimum Amount

Additional Details

Company Website

Ally Bank

Ally Bank

3
3
5
11 total votes
12-month APY 2.1% 12-month APY
Minimum Amount $1K Minimum Amount
  • Early Withdrawal Fee
CIT Bank

CIT Bank

1
 
 
1 total votes
12-month APY 1.27% 12-month APY
Minimum Amount $1K Minimum Amount
BBVA Compass

BBVA Compass

 
1
1
2 total votes
12-month APY 1.85% 12-month APY
Minimum Amount $500 Minimum Amount
  • Early Withdrawal Fee
Discover Bank 30-Month CDs

Discover Bank 30-Month CDs

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12-month APY N/A 12-month APY
Minimum Amount $2.5K Minimum Amount
  • Early Withdrawal Fee
Discover Bank 24-Month CDs

Discover Bank 24-Month CDs

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12-month APY N/A 12-month APY
Minimum Amount $2.5K Minimum Amount
  • Early Withdrawal Fee
Goldwater Bank

Goldwater Bank

 
 
2
2 total votes
12-month APY N/A 12-month APY
Minimum Amount $5K Minimum Amount
  • Early Withdrawal Fee
State Farm

State Farm

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12-month APY 0.1% 12-month APY
Minimum Amount $100 Minimum Amount
  • Early Withdrawal Fee
USAA

USAA

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12-month APY 0.71% 12-month APY
Minimum Amount $1K Minimum Amount
  • Early Withdrawal Fee
Scottrade

Scottrade

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12-month APY 0.25% 12-month APY
Minimum Amount $500 Minimum Amount
  • Early Withdrawal Fee
Fidelity

Fidelity

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12-month APY 1.5% 12-month APY
Minimum Amount $1K Minimum Amount
  • Early Withdrawal Fee