Yesterday I walked you through using Money Aisle to find bank CDs. The banks compete for your deposit and you end up with a higher percentage than you would otherwise.
Or do you?
Would you be better served doing a few quick internet searches to discover the best interest rate? I thought I’d do another quick test run and see what I could find.
As a recap from yesterday, these are some of the interest rates I found for $1,000 and $5,000 deposits:
- 6 months – 1.90% / 1.90%
- 12 months – 2.30% / 2.50%
- 24 months – 2.50% / 2.65%
- 36 months – 3.00% / 3.10%
- 48 months – 3.50% / 3.50%
- 60 months – 3.75% / 3.75%
After some quick Google searches I came up with the following additional resources:
- Bankrate.com’s list of CDs
- Bankaholic.com which regularly posts CD deals
- Typical online high-yield savings banks (ING Direct, HSBC, Ally, etc.)
- American Express and Chase offer CDs (I’m sure Discover does as well)
- Total Bank which seemed to have good eCD deals
- Local credit unions
Here’s a table breaking down the rates I found for some of the above listed resources.
| CD Length in Months | ||||||
| 6 | 12 | 24 | 36 | 48 | 60 | |
| Money Aisle $1,000 | 1.90% | 2.30% | 2.50% | 3.00% | 3.50% | 3.75% |
| Money Aisle $5,000 | 1.90% | 2.50% | 2.65% | 3.10% | 3.50% | 3.75% |
| Bankrate Found: | 1.90% | 2.30% | 2.65% | 3.10% | 3.55% | 3.65% |
| ING Direct | 1.25% | 1.50% | 1.50% | 1.50% | 1.75% | 1.75% |
| HSBC | 1.25% | 2.00% | 1.60% | 1.60% | 1.60% | N/A |
| Ally | (Please | click | the link | to see | current | rates.) |
| American Express | 1.00% | 1.75% | 2.40% | 2.75% | 3.00% | 3.40% |
| Chase $1,000 | 0.25% | 0.25% | 1.01% | 1.01% | N/A | N/A |
| Chase $10,000 | 1.01% | 1.35% | 2.00% | 2.50% | N/A | N/A |
| Total Bank (eCD) | 2.55% | 2.55% | N/A | N/A | N/A | N/A |
| Total Bank (traditional CD) | 0.65% | 0.85% | 1.00% | 1.10% | 1.10% | 1.35% |
Bankrate is a great first option because it will search a bunch of different listed CDs that fit your criteria. I’m not sure if Bankrate and Money Aisle use the same database to search from, but the results seemed similar. For example when I searched for a 12 month CD there was one bank at the top — Discover — that were offering 2.30%, the same amount I found in my $1,000 12 month search on Money Aisle.
Where Should You Turn?
From the above chart Total Bank’s eCD has the best rate in the short-term of 6 or 12 months. However, I’ve never heard of Total Bank and to be honest I am a bit skeptical. After that the next best choice appears to be Ally Bank, which used to be GMAC. (I plan to do a review of Ally Bank in the future.)
Let me also remind you that you have another set of options: your current bank or local credit union. I did a search in my area and most of the credit unions were offering very low returns for CDs so I didn’t bother to list them. But your area may be different.
Why Searching for the Absolute Highest CD Can Be a Poor Decision
Yes, that’s right. This article is somewhat irrelevant. I plan to write another post to go into greater detail, but here is the basic idea: looking for the absolute highest CD rate is a good idea in general, but it ultimately depends on how much money you are putting into the CD.
The difference between the best rate I found for a 12 month CD (2.30%) and the ING Direct 12 month CD (1.50%) is, you guessed it, 0.80%. That sounds like a lot — and it can be. But on a $1,000 CD it comes to grand total of $8.
Would I like to have an extra $8? Yes.
Should I spend two hours looking for the deal that provides me that extra $8? Probably not.
Nonetheless I hope the above table can be useful to you. I’m impressed with Ally Bank‘s strong push back into the marketplace. They are doing what any sensible business would do to compete — having a more compelling offer. Because of this research summarized in the table above I may open a CD with them sometime soon. I’ll fill you in when I do.
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