Lock In Those CD Rates!

After the Feds cut the discount rate to 5.75% we feel that the banks will play it safe on the CD rates especially the long term ones. This is a good time to lock in the CD rates, especially if you are looking to invest in CDs for a year or more. The short term CD rates (3 months, 6 months) are competitive. A probable cause might be the fact that more people are interested in these products so the banks are offering attractive rates to woo the customers in an effort to win the competition. Another reason may be that banks are not sure what the interest rates will be after 6 months. It might be lower than current rates. In that case they do not want the customers to lock their money into long term CDs paying high yield rates.

Whatever be the reason, since the time has come to invest in our CDs to keep our ladders intact, we are playing it safe by going for long term CDs. We have a hunch that the rates are going to drop soon. So locking in the current high APY rates on long term CDs will hopefully do us good this year.

The best rates that we could find for a 6 month CD were from:

• IndyMac: 5.55% APY on a deposit of $1000 or more.
  
• Washington Mutual: 5.50% APY on a deposit of $1000 or more.

On the one year CD front, Countrywide Bank, IndyMac Bank and Bank Of Internet are offering competitive APYs. The details are as follows:

• Countrywide Bank: APY: 5.65%, Min Deposit: $10000
• IndyMac: APY: 5.50%, Min Deposit: $5000
• Bank of Internet: APY: 5.44%, Min Deposit: $1000

Countrywide Bank is having trouble with their lending arm due to the sub-prime mortgage fiasco. Being conservative and having no clear view of their overall business scenario at this point, we made it a point to steer clear of (anticipated) trouble. So for us, the winners are IndyMac and Bank of Internet (BOFI). Based on our past experience we know that both these banks deliver the promised goods, but in our opinion BOFI has better customer service. Hence we purchased our CDs from BOFI. We shall keep you updated about our experience with BOFI.

We look forward to hear from you regarding your CD experiences. In the meantime we wish you Happy CD Shopping!

Image Source(s): iStockPhoto

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