1-Year CD Rates Over 2% Are Tempting But Preserving Liquidity In A Crisis Is Essential
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1-Year CD Rates Over 2% Are Tempting But Preserving Liquidity In A Crisis Is Essential

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BestCashCow today shows online banks offering one-year CD rates as high as 2.28%.    Depending on where you live, you may also find local banks or credit unions near where you live that have 1-year CD rates at or around that level.

It is very compelling to want to rush into 1-year CDs at or around that level with any FDIC-insured bank up to FDIC limits.   Savings rates are still strong, but they seem guaranteed to fall further as we work our way through 2020.

But, it also seems to me that it is an especially important time to think very, very differently about liquidity than we may have ever thought about it before.   As we work our way through a COVID-19 crisis that is certain to become more and more profound over the next several months with a desperate President.

If you anticipate that you might be economically vulnerable through a loss of job or sickness, the next year would be an important time to keep your liquidity.

Those who are not economically vulnerable and are certain to have the resources to get to the other side of the Coronavirus pandemic will also want to be certain that they have the liquidity to take advantage of opportunities that we will certainly see in equity and bond markets over the summer and fall as it proves difficult to safely reopen the economy.    Opportunities to invest in real estate and in struggling small businesses where you live are almost certain to emerge as well.

Finally, when I encourage people to be careful to preserve their liquidity, they often tell me that they can always get their money out of CDs with the payment of an early withdrawal penalty.   I would encourage these folks to read this article that I wrote in 2016.   Banks and credit unions retain discretion to deny early withdrawal request, and while it is exceedingly rare, we really do not know what steps banks may need to take to preserve their positions as we get through 2020. 

BestCashCow has always advocated that consumers keep large percentages of their assets in cash for difficult periods and that they make the most of their cash by seeking the highest returns available.   This next year, however, could be an important time to favor liquidity over the premiums that short-term CDs may offer.

If you insist on locking down a rate, no penalty CDs may offer a solution.   You’ll find those rates listed among our special CD products here.

Ari Socolow
Ari Socolow: Ari Socolow is the Chief Economist and Editor-in-Chief at BestCashCow. He is particularly interested in issues relating to financial literacy and bank transparency. Since co-founding this website in 2005, Ari has been frequently cited in the media as an expert on local and national savings accounts, CD products, mortgage and loan products and credit card rewards products.

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Today's Highest Online CD Rates

Bank Product Term Interest Rate (APY)
Navy Federal Credit Union 1-Year 1.55% APY with $100,000 minimum
TIAA Bank / Everbank 1-Year 1.35% APY with $1,000 minimum
TotalDirect, a division of City National Bank of Florida 1-Year 1.30% APY with $25,000 minimum
Gte 3-Year 1.46% APY with $500 minimum
Navy Federal Credit Union 3-Year 1.45% APY with $100,000 minimum
First Internet Bank of Indiana 3-Year 1.41% APY with $1,000 minimum
Gte 5-Year 1.66% APY with $500 minimum
TIAA Bank / Everbank 5-Year 1.60% APY with $1,000 minimum
First Internet Bank of Indiana 5-Year 1.57% APY with $1,000 minimum

See More Online CD Rates →

Comments

  • Richard darling

    April 16, 2020

    Do you really expect us to believe anyone who says, "desperate President who is bound to continue to cause death and destruction before he finally leaves office on January 20, 2021." Such a careless comment. He needs to be disciplined for personal opinions like these.

  • joe

    April 20, 2020

    I may be naive, but to say, "desperate President who is bound to continue to cause death and destruction before he finally leaves office on January 20, 2021."


    I find offensive...

  • dave

    April 20, 2020

    I also was offended by the guy who remarked about our President. If he ever said that about Obama,He would never get away alive.

  • Larry

    April 21, 2020

    Your biased comment about the Greatest President this nation has ever had the privilege to serve tells me you are nothing but a I'll (sic) informed, blind, blow hard, like most money managers!

  • R

    April 22, 2020

    As we work our way through a COVID-19 crisis that is certain to become more and more profound over the next several months with a desperate President who is bound to continue to cause death and destruction before he finally leaves office on January 20, 2021.

    Are you a fool or just out of touch with reality...

    If things were left up to the Left wing Radicals who can't see beyond the hateful spiteful nose on their ugly face the socialist democrats living in their gated mansions while hard working americans get screwed by the Nancy Pelosi's and chuck schulers with the aid of the Commi media types that print this garbage about the president we would be in worse shape than we are. Instead of focusing your political hatred for a Republican and Christian's around the country you would do better to put the rage where it would do the most good, like who is behind this pandemic China you fool and not the only man who is doing something to help other people. The problem with hate is it is a poison that grows and grows just like a virus and you my friend are infected.

  • Jerome Jackson

    April 22, 2020

    Agree with the author's analysis. It is fascinating that at least 5 Trump-loving racists were able to make it to the third paragraph and then to write comments.

  • McHale

    April 27, 2020

    Jerome,
    Simple minds pull out the race card......

  • RK

    May 15, 2020

    To blame the President for a pandemic is not only ridiculous, it shows the true nature of the author of this article. Obviously, I will look elsewhere for financial advice, from someone who is not using the current pandemic disaster to push his own political views.

    Tell me, Mr. Socolow, do you blame every leader of every country worldwide for the deaths from this pandemic?

  • Rod Flunck

    May 16, 2020

    @RK You may have been asleep the last 4 years, but since this man became President he has undermined every preparedness measure imaginable, leaving the US completely exposed to this disaster. Now, as over 80,000 Americans have perished, he celebrates his rankings and continues to motivate his base to take to the rise up against countermeasures. As for Mr. Socolow, I have been reading his articles on this site for years, and if anything he is much too deferential to the President.

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