Posted on February 08, 2012
What’s hot in 2012? 2.01% APY Cardinal First Choice Checking. Learn more.
Best Three Year Online CD Rates - February 22, 2012
Three Year Certificates of Deposit (CD) rates from online banks are often above average if you are willing to open and manage your account using the Internet. Three years is an intermediate term for CDs and banks will often pay you a bit more of a premium to keep your money locked in for a longer duration.
| Online Banks | APY | Min Bal | Max Bal | More |
|---|---|---|---|---|
| Discover Bank | 1.35% | $2,500 | _ | |
| Discover Bank CDs | ||||
| EverBank | 1.26% | $1,500 | _ | |
| CIT Bank | 1.51% | $100,000 | _ | |
| USAA Federal Savings Bank | 1.51% | $175,000 | _ | |
| Nationwide Bank | 1.45% | $100,000 | _ | |
| Ally Bank | 1.34% | $0 | _ | |
| Sallie Mae Bank | 1.30% | $0 | _ | |
| OneWest Bank | 1.25% | $1,000 | _ | |
| Colorado Federal Savings Bank | 1.25% | $5,000 | _ | |
| AIG Bank | 1.22% | $2,000 | _ | |
| Ascencia Bank | 1.16% | $500 | $97 | |
| Bank of Internet USA | 1.15% | $1,000 | _ | |
| Acacia Federal Savings Bank | 1.10% | $500 | _ | |
| New Dominion Direct | 1.10% | $3,000 | _ | |
| AirBanking | 1.00% | $500 | _ | |
| Personal Savings by American Express | 0.90% | $0 | $250,000 | |
| Aurora Bank | 0.35% | $100,000 | _ | |
What to Look for in an Online CD Account:
FDIC Insurance - In order to secure the viability of the US banking system, the Federal government provides insurance to a maximum amount of $250,000 per individual per institution (or $500,000 for joint account holders). While all deposits (CDs, Checking, Savings Accounts) held in the same type of ownership are added together and insured to $250,000, funds held in different types of ownership (Individual, Joint, Trust, Retirement) may fall under separate FDIC insurance provisions. Please visit the FDIC's website to determine if your financial institution is insured and use its "ask Edie" program to determine your coverage limits. We recommend that you deposit funds in only FDIC insured institutions and that you do not exceed FDIC coverage limits. All banks listed on BestCashCow are FDIC insured.
Minimum Deposit - There is such competition for your money that the best CD rates are often available for sums as little as $500.
Term and CD Rates- Three month and six month certificates of deposit rates do not dramatically exceed those in online savings and money market accounts, and money market funds. Moreover, investors in states with higher state tax, such as New York and California, in an ordinary environment (not 2011) will perform equally well in a three-month US Treasury Bond or pre-refunded municipal bonds after they account for the fact that interest produced on those products are tax advantaged.
Generally, longer the CD term, the higher the CD rate. In general, the term you choose depends on how long you want to tie up your funds and also what you think will happen to interest rates.
Interest rates will fall. Then it is better to put money into longer-term CDs to maintain the high rate as long as possible.
Interest rates will rise. Put money into short term CDs. By keeping your cash more liquid, you can re-invest it as rates go up.
Interest rates will remain flat. In this case, going for longer-term CDs will help you maximize your interest income.
Learn more about getting the best CD rates.
Avoiding CD Pitfalls:
Early Withdrawal - Any certificate of deposit will bear substantial penalties for early withdrawal, if it is even allowed. Ordinarily, the penalty for early withdrawal will be a loss of all of your accrued interest, but there are certain circumstances where banks will also assess penalties that will result in a loss of some of your principal.
