Posted on February 08, 2012
What’s hot in 2012? 2.01% APY Cardinal First Choice Checking. Learn more.
Best Five Year Online CD Rates - February 22, 2012
Five Year Certificates of Deposit (CD) are generally the longest term CD that most banks will offer. They tend to offer the highest rates but require the longest commitment. Five year CDs are especially popular in a declining interest rate environment as depositors can lock money in at the highest rate possible for the longest period of time. They are also popular with depositors who are willing to lock up money for five years in return for extra yield. Online banks often offer Five Year CDs that are above the average national rate.
| Online Banks | APY | Min Bal | Max Bal | More |
|---|---|---|---|---|
| Discover Bank | 1.75% | $2,500 | _ | |
| Discover Bank CDs | ||||
| EverBank | 1.76% | $1,500 | _ | |
| USAA Federal Savings Bank | 1.91% | $175,000 | _ | |
| Nationwide Bank | 1.85% | $100,000 | _ | |
| OneWest Bank | 1.80% | $1,000 | _ | |
| Ally Bank | 1.74% | $0 | _ | |
| AIG Bank | 1.72% | $2,000 | _ | |
| Colorado Federal Savings Bank | 1.65% | $5,000 | _ | |
| iGobanking.com | 1.64% | $1,000 | _ | |
| Bank of Internet USA | 1.60% | $1,000 | _ | |
| Sallie Mae Bank | 1.50% | $0 | _ | |
| AirBanking | 1.50% | $500 | _ | |
| New Dominion Direct | 1.35% | $3,000 | _ | |
| Ascencia Bank | 1.26% | $500 | $97,000 | |
| Acacia Federal Savings Bank | 1.25% | $500 | _ | |
| Personal Savings by American Express | 1.10% | $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.
