CD Advice Needed!

[jc3900]

Well, I think I am going to get my first cd opened in the next week. The only question is WHERE? I need the money for tuition that is due roughly 3,6, and 9 months from June. I have over $10,000 that will be spread over the three periods. So, it could be necessary to just open a 3 month cd if they reward you for a large principal investment. Also, the other thing I am a little worried about is the forecasted surge in bank failures. I don't want to end up with a lemmon of a bank, so I need some type of ratio or something to measure a banks safety. Yes, I know I won't lose my money if it is FDIC insured but won't it take time to get my money back?

EDIT:Also, when I open a cd with a bank is my rate locked in for the term of the cd?

Double EDIT:And, would it be a good Idea to just consider a high yielding savings account?

[sweeps]

CDs are so last century. Put your short-term money in a high yield savings account, T-Bills, or muni bonds. Put your long-term money in stocks.

[disneysteve]

Go to bankrate.com and search for CD rates for various maturities. I don't think they list 3-month CDs. I believe they start at 6 months. But find the top rates and call the banks to ask about 3-month rates. Also, check your local banks, particularly ones that aren't part of a big company like Bank of America or PNC or Commerce - go for the truly local/regional banks.

A traditional CD locks the rate for the term of the CD. There are some weird variable ones but stay away from them.

The advantage of a high-yield account is liquidity. The disadvantage is the rate floats.

[jIM_Ohio]

There are two sweet spots on CDs

One is minimum amount of CD- at my bank the difference between 4999 and 5000 invested is about .5% in interest rates.

The second is duration- 7 month and 13 month tend to have best yields at my bank.

One advantage to having CDs is the bank might make you a preferred member (if CDs meet some type of 50k minimum balance requirement) which gets you low fee loans, banks accounts and similar.

[jc3900]

What do you guys think about a high yielding savings account. Remember I need to use ALL of the money. If I got a high yielding savings account, would I be up for any fees when I close the account that could have been avoided with a cd?

[poundwise]

For a combination of safety/stability and decent rates on 3, 6, and 9 month CDs and money market savings with a well-known institution, I think GMAC Bank fits the bill nicely.

Savings rate: 3.00% APY

3mo CD: 3.35%
6mo CD: 3.45%
9mo CD: 3.55%


Of course, there are several online savings options that pay more without locking you into anything. The caveat is that the rates on savings are, of course, not guaranteed either.

[maat55]

Well, I think I am going to get my first cd opened in the next week. The only question is WHERE? I need the money for tuition that is due roughly 3,6, and 9 months from June. I have over $10,000 that will be spread over the three periods. So, it could be necessary to just open a 3 month cd if they reward you for a large principal investment. Also, the other thing I am a little worried about is the forecasted surge in bank failures. I don't want to end up with a lemmon of a bank, so I need some type of ratio or something to measure a banks safety. Yes, I know I won't lose my money if it is FDIC insured but won't it take time to get my money back?

EDIT:Also, when I open a cd with a bank is my rate locked in for the term of the cd?

Double EDIT:And, would it be a good Idea to just consider a high yielding savings account?

Certificate of depression, why waste your time, there are plenty of high interest savings accounts to choose from. See online savings options.

[noppenbd]

What do you guys think about a high yielding savings account. Remember I need to use ALL of the money. If I got a high yielding savings account, would I be up for any fees when I close the account that could have been avoided with a cd?

Most high-yield online savings accounts do not charge any fees. The worst thing that usually happens is if your balance falls below a certain threshold your interest rate is reduced. Make sure you check the specific bank's terms though.

EDIT: If I decide to switch banks, I usually leave $1 in the account to make it easier to move my money back if I change my mind later.

[jc3900]

noppenbd: In your mind, what is a safe(meaning continually high interest rates and no big decreases) online bank?

[noppenbd]

In online banking there are no guarantees, so you have to be proactive and keep an eye on the rates. Luckily, poundwise keeps an updated list of the best rates:

http://www.savingadvice.com/forums/investing-banking/19240-online-savings-accounts-current-rates.html

Currently AARP has the highest rate (4.05%). I haven't jumped over to them but I might if the difference gets high enough.

I currently use Provident Direct (3.50% APY) but I previously used Emigrantdirect (currently 2.75% APY) and iGoBanking (3.28%). Of the 3, Emigrantdirect has the best site, and has been around the longest.

I'm sure there are others on this site that have more experience with high-yield online accounts.

[jc3900]

I think I am going to go for a cd. I don't want to mess around with any fees or anything I might get from just a regular savings account. I am considering GMAC for a 3,6,and 9 month cd. However, before I pull the trigger I want to make sure that they are financially stable. Does anyone know a place where I could get access to financial statements?