Highest 1-yr CD rate 2.5% APY

[kidsyo]

For those of you who like to put money in banks instead of stocks and other high risk investment options, this might be a good deal for you.

Bank of China's New York Branch is having a special CD rate on their Chinese currency or Renminbi (RMB). It is almost the same as a regular US Dollar CD, the only difference is you need to open RMB-denominated account with Bank of China and then open the RMB CD.

Minimum deposit $10,000 USD to qualify the special rate, No maximum. The bank is FDIC insured up to $250,000 USD per depositor. So i think it is pretty save. However you will bear the exchange rate risk, which means you make money on top of the 2.5% interest profit if the RMB strengthens against US Dollar, and you lose money if the RMB weakens against US Dollar.

They have 2 branches in New York City. If you live nearby, visit their branch for details. If you live out of New York, call them to get more information (212)-925-2355. They do open accounts for out-of-states customers by mail.

CD terms also can be 3-month, 6-months and 9-month with 1.20%, 1.60% and 2.00% respectively. Promotion only runs one month from 5/29/2012 to 6/29/2012

I opened one last year because they had a same promotion last year and Wall Street Journal had an article about it. Go google it out.

[Nightfly]

Peer-to-peer lending, which can give returns of 10% or more for those willing to do a little tiny bit of research (not like stocks, mind you) makes avoiding the paltry returns of any bank worth any saver's time.

Actually, saving money in a bank savings account is risky in itself: you won't beat inflation, and the opportunity cost of losing out on better returns is a gamble I'd rather not take.

[disneysteve]

Peer-to-peer lending, which can give returns of 10% or more for those willing to do a little tiny bit of research (not like stocks, mind you) makes avoiding the paltry returns of any bank worth any saver's time.

Actually, saving money in a bank savings account is risky in itself: you won't beat inflation, and the opportunity cost of losing out on better returns is a gamble I'd rather not take.

Comparing FDIC-insured CDs to peer-to-peer lending goes beyond apples to oranges. It is more like apples to giraffes. They are two completely different things and shouldn't be considered for the same purposes. CDs and savings accounts are for money that needs to be kept safe and secure with no risk of principal loss and relatively easy liquidity. None of that applies to peer-to-peer lending. Not saying P2P is bad. It is just a whole different animal.

[Nightfly]

Peer-to-peer lending offers less risk than only a few years ago. It has more liquidity than many other investments, and a one-year lock-up in a CD is not liquidity, but I digress.

The OP is touting a savings account with the usual dismal return that savings accounts provide. Anyone reading this should take into account the pros and cons of FDIC insurance (security) against inflation along with risk/reward ratio. For anything approaching $10K, it seems that better options exist vs. savings accounts, but everyone is different. Besides, it's about time banks felt the sting of a little competition, and while peer-to-peer isn't FDIC insured yet, maybe down the road it will be. Banks are not a friend to most consumers. Why should they continue to receive consumer money when alternatives, albeit very new, exist? Time for a change. 2.5% is pretty bad, even if it's FDIC insured.

[disneysteve]

Peer-to-peer lending offers less risk than only a few years ago. It has more liquidity than many other investments, and a one-year lock-up in a CD is not liquidity, but I digress.

Time for a change. 2.5% is pretty bad, even if it's FDIC insured.

Would you put your emergency fund into peer-to-peer lending? If so, when your AC dies or the car needs a major repair, how long does it take to get the money out? With the CD, you walk into the bank and cash out the CD. You'll lose a few months interest for early withdrawal but it is totally liquid.

Again, I'm not arguing against P2P lending. I've looked into it myself but at the time it wasn't available in my state (haven't checked lately). It just isn't in any way comparable to a CD or savings account. They are totally different things.

[jpg7n16]

For those of you who like to put money in banks instead of stocks and other high risk investment options, this might be a good deal for you.

Don't want to take the risk of stocks and their volatility? Why not speculate on foreign currency values! Not only will you still make less than inflation, but you open yourself up to the risk of losing money if the exchange rate goes down. Can't get safer than that. What a deal!

OP, just FYI - foreign currency plays are part of those "other high risk investment options" you said you're trying to avoid.

See charts at Exchange Rates Graph (American Dollar, Chinese Yuan) - 120 days - x-rates

[kidsyo]

Don't want to take the risk of stocks and their volatility? Why not speculate on foreign currency values! Not only will you still make less than inflation, but you open yourself up to the risk of losing money if the exchange rate goes down. Can't get safer than that. What a deal!

OP, just FYI - foreign currency plays are part of those "other high risk investment options" you said you're trying to avoid.

[/url]

Thanks for the heads up. I am fully aware of what I am getting into. I am optimistic about China's economy and its currency value. There might be some ups and downs along the way, eventually its currency will be worth more than what it is right now. China has been keeping it artificially low to support its exports and manufacture jobs. but the living standard is still low and people are still poor, the only way to change that is let its currency appreciate at reasonable pace until it really reflects the real value of its currency. just my opinion.

[josetann]

If we're going to invest in other countries' currencies...just dump it in a regular Australian savings account. 4.95% interest, or 5.75% if you meet certain conditions (no withdrawals, deposit at least $200/mo). High Interest Savings Account - Best Interest Rates - RAMS Saver Account

Now, I think the Australian dollar will fare fairly well against the US dollar. And even if it drops some, the high interest rate would more than make up for it. But it's still speculating. Entire thing could come crashing down at the end of the year. So I wouldn't recommend it for someone just looking to get a decent interest rate on a US savings account.

[Petunia 100]

Peer-to-peer lending offers less risk than only a few years ago. It has more liquidity than many other investments, and a one-year lock-up in a CD is not liquidity, but I digress.

The OP is touting a savings account with the usual dismal return that savings accounts provide. Anyone reading this should take into account the pros and cons of FDIC insurance (security) against inflation along with risk/reward ratio. For anything approaching $10K, it seems that better options exist vs. savings accounts, but everyone is different. Besides, it's about time banks felt the sting of a little competition, and while peer-to-peer isn't FDIC insured yet, maybe down the road it will be. Banks are not a friend to most consumers. Why should they continue to receive consumer money when alternatives, albeit very new, exist? Time for a change. 2.5% is pretty bad, even if it's FDIC insured.

How could the FDIC possibly guarantee that Joe Brown of Tulsa and Susie Jones of Chicago will repay the money John Investor in Denver lent to them? That is never going to happen. And that is a good thing. As a taxpayer, I really don't want to be on the hook when others default on their unsecured consumer debt.

You don't keep cash in an FDIC insured account because the bank is your friend, you do it because it is prudent to have some cash immediately available to you in the event you should need it.

[Petunia 100]

If we're going to invest in other countries' currencies...just dump it in a regular Australian savings account. 4.95% interest, or 5.75% if you meet certain conditions (no withdrawals, deposit at least $200/mo). High Interest Savings Account - Best Interest Rates - RAMS Saver Account

Now, I think the Australian dollar will fare fairly well against the US dollar. And even if it drops some, the high interest rate would more than make up for it. But it's still speculating. Entire thing could come crashing down at the end of the year. So I wouldn't recommend it for someone just looking to get a decent interest rate on a US savings account.

I agree. I'm not interested in taking on currency risk on money I need to keep safe. If I don't need to keep it safe, I'll add it to my investments.

Still, it may appeal to some, so thanks for sharing the info, kidsyo.

[SeanH]

You have to be an Australian resident to take advantage of that account.

[sblatner]

I have had my IRA at Lending Club for 18 months. My average return is 6.26%. I have had some defaults but the interest I'm making on the loans that are paid more than makes up for the defaults. LC is the only place we are making money right now. Ever since I was able to fully invest the funds, I have limited myself to loans less than $2500. I feel that lower loan amounts are less risky. It is really working out great for me and I'm very happy to help people out who want to avoid banks.

[josetann]

You have to be an Australian resident to take advantage of that account.

To be honest, I didn't check that out...we are, so no biggie for us. But I know there are accounts that can be opened by non-residents. I've read about a 10% withholding tax on interest for non-residents...about how people are able to open accounts without setting foot there (that can be tricky, but I "think" one could open an Australian HSBC account at a US branch...I've heard of it being done, but I dunno). But my main point was that I personally wouldn't recommend it for someone who wants to earn a high interest rate on their US dollars. If you earn USD and are only going to spend USD, then keep your money in USD. If you're investing in an account in a different currency...ok it may have a better interest rate, but you're also speculating on currency valuations. Now...that's not necessarily a bad thing. It could be part of a diverse portfolio or what-have-you. But if you're expecting to withdraw your money in a year (when the CD matures)...just sayin'.

[kv968]

Thanks for the heads up. I am fully aware of what I am getting into. I am optimistic about China's economy and its currency value. There might be some ups and downs along the way, eventually its currency will be worth more than what it is right now. China has been keeping it artificially low to support its exports and manufacture jobs. but the living standard is still low and people are still poor, the only way to change that is let its currency appreciate at reasonable pace until it really reflects the real value of its currency. just my opinion.

The Yuan may eventually be worth more than it is now but what will it be worth compared to the dollar?

YTD the Yuan has appreciated a little over 1% (all of that in the past month) but the dollar has appreciated a little under 3% (4% in the last month alone). Just that move alone would have wiped out the 2.5% interest rate on the CD. Granted, that's only one month in a volitile currency market but I can't see the Yuan appreciating much more.The only "bright spot" I could see happening with that scenario is the dollar falling from its highs but I think the Chinese would let the Yuan fall right with it.

The living standard is low and the people poor, however, being an export based economy, I think the Chinese gov't would lean towards a weaker currency which would help jobs rather than worry about inflation and cheaper imports for its people.

Although interesting, to me the 1.2-2.5% interest you could make off the CD just isn't worth the currency risk. Especially at this point in the global economy.