This week we travel to Buffalo, TX to recognize Citizen State Bank and their extremely awesome 2.85% Fixed rate IRA (FIRA also known as IRA CDs). How good is that? Very good. According to BestCashCow data (based on data from thousands of banks and credit unions) the best 5-year CD rate is 2.78% APY. So that means the Citizen State's retirement CD beats the best regular CD regardless of term. Now, this is a retirement product so it's a bit different, but still, the rate is very good.

What makes it even better is that the product and term are flexible. You can invest the money into either a Roth IRA or a Traditional IRA. If you invest in a Roth, then you can choose terms of 3, 12, or 60 months. If you invest in a Traditional IRA, then the terms are 3, 12, 18, 30. That means you could invest money into your IRA for three months and receive 2.85%. Or you could invest in an 12 month FIRA and receive the same rate. Where can you earn 2.85% annual return for a three month term?

I spoke to Citizens State and they confimed this. The nice woman on the phone also told me that she didn't expect they would be lowering rates anytime soon.

So, who is Citizens State Bank? The bank, founded in 1925 operates five branches spread out south of Dallas. You can view the bank's branches here. This is important because you can only open a FIRA with Citizens State by walking into one of their branches. They don't accept applications via the phone or Internet. That's the biggest negative about this product - it's not available to those outside of the bank's region.

The bank has an extremely low Texas Ratio of 1.96% (low is good) and has aggressivily grown their assets over the last five years from $205 million in 2006 to $458 million today.

If you don't live near a Citizens State branch, check out the Fixed IRA rates from banks and credit unions in your local area. If you do open an FIRA there, let us know how the process went. We'd love to hear your experiences cashing in on some of these weekly rate deals.

Previous Weekly Rate Deals

• December 5, 2011 - Digital Federal Credit Union Offering 2.86% APY CD - Nationally Available
• November 29, 2011 - Community First Bank Offering 2.78% APY 60-Month CD
• November 21, 2011 - Premier Federal Credit Union Offering 2% APY on 24-Month CD
• November 14, 2011 - Institution for Savings of Newburyport Offering 3 Year CD at 2.50% APY
• November 7, 2011 - State Savings Bank of Rake, IA Offering 3.82% APY FIRA
• October 31, 2011 - First Choice Bank Offering 2.80% APY 5-Year CD
• October 24, 2011 - First National Bank of St. Ignace Offering 12-Month Flex CD at 1.51% APY
• Oct 17, 2011 - Weekly Rate Deal - Navy Federal Credit Union Offering 3% APY 12-Month CD
• Oct 7, 2011 - Farmers & Traders Bank Takes Weekly Rate Deal for 3% APY 60-Month CD

Check back next Monday for a new bank deal. Email any deals you know about to ratedeal (at) bestcashcow.com. Feel free to also share them below. If you're a bank and have a great deal not listed on BestCashCow, register for access and add the deal to the site.

While the U.S. economy continues its agonizing and tentative recovery, other countries are rebounding more quickly from the global slowdown of 2009 and 2010 and are showing signs of growth and expansion even as the U.S. struggles to regain a solid footing. This year several countries have experienced strong appreciation of their currency against the USD like China up 6.5%, Australia up 15%, Singapore up 11%, and Canada up 6%. This could be an opportunity to invest in a currency-linked certificate of deposit (CLCD). A CLCD is a certificate of deposit that provides a performance return based upon the change in valuation of an underlying single currency or a basket of currencies. There may be a nominal interest rate that returns income as well.

There are several important issues to be aware of when investing in a CLCD. First, although the CD is FDIC insured, it is only insured if the bank issuing it fails or becomes insolvent. The FDIC program does not cover loss of value due to currency fluctuation. There is a liquidity risk that may result in the CD having less value or no value in the event that you need to access your funds before maturity. Most CLCDs have a participation rate (similar to equity-linked certificates of deposit) that determines what percent of the currency performance return the investor gets. The most attractive CLCDs offered use 100 percent – meaning that if the currency increases in value by 15 percent over the term of the CD that you will receive the full 15 percent. There are a few ‘exotic’ CLCDs that actually offer a participation rate of up to 120 percent. An equity-linked CD may have an interest cap, but very few CLCDs include an interest cap because the rate of interest is not the primary value driver of the investment. It is usually no more than 0.5 percent annualized.

Let’s take an example. If you were to purchase a CLCD with a face value of $ 100,000 USD that is linked to the Swiss franc (CHF) it might look like this. The CHF which presently trades at 1.0793 to USD and has traded in the past 12 months as high 1.4100 to USD. If you buy the CLCD today the exchange rate is locked in at the current rate of 1.0793. When the CLCD matures in 12 months the prevailing rate will be used to determine the performance return. If for example the CHF resumed its high of 1.4100 at the time of maturity, the rate of return would be 30.6 percent for 12 months. At full participation the investor would receive $ 130,600 USD when redeeming their $ 100,000 USD face value CLCD on year from now.

But the opposite can also occur. If one year ago you purchased a CLCD linked to the Indian Rupee (INR) you would have purchased at an exchange rate of approximately 0.0223 to USD. Today, the INR trades lower at 0.01998 or 10.4 percent less. When you redeem your $100,000 USD face value CLCD you would receive only $ 89,600 USD. The loss of value of $10,400 would not be covered by FDIC insurance because the bank did not fail or become insolvent. The loss was due the change in currency valuation.

It should be clear from our discussion here that CLCDs are more complex than ELCDs due to the volatility of foreign exchange rates. CLCDs are available for terms of 3 months to 5 years and can be linked to a single currency or customized to contain a basket of currencies. While both CDs function in a similar fashion, behavior of the underlying currency or index can be very different and subject to extreme variation over the term of the CD. You should read all materials with care and determine if the investment is suitable for you.

Banks that offer currency-linked certificates of deposit

EverBank

EastWest Bank

HSBC

It wasn’t so long ago that certificates of deposit (CDs) enjoyed a special place in the hearts of savers everywhere. But, CDs were looked down upon by investors who pinned their hopes on generating above average rates of return investing in the stock market. As market volatility took its toll on active investor’s portfolios, a new hybrid investment was created to address the needs of conservative savers. The new offering, called an equity-linked CD, guaranteed return of principal and payment of interest if the market index did well. The best part is that it’s covered by the FDIC program.

Also known as a market-linked CD or the indexed CD, they all follow the same basic premise: offer a time-based deposit vehicle (CD) and link its interest payments to a group of securities or an index. Add a few restrictions regarding how much of the index gain the investor will participate in, put a cap on the amount the investor can realize on an annual basis and make the CDs callable, like a bond. One more feature (for the issuer that is) create two methods to calculate the interest to be paid. Additional information and guidance is provided by the Securities and Exchange Commission (SEC).

Most equity-linked CDs are tied to an index like the S&P 500 or the NASDAQ. This enables CD investors to participate in some of the gain of an improving market. All equity-linked CDs have a participation rate that limits the amount of the index performance that will be used in the calculation of gain. For example, a five year equity-linked CD indexed to the S&P 500 may limit participation to 70 percent of the total gain of the S&P 500. So if the index increases 15 percent the first year and the participation rate is 70, the rate to be paid to the investor would be 10.5 percent. This calculated rate may in turn be subject to a cap which limits the annual interest paid or the lifetime interest. If an equity-linked CD has an annual cap of 9 percent then in this example, instead of being paid 10.5 percent, the investor would receive 9 percent as provided by the limit.

A feature that should be avoided is the callable option whereby the issuer of the CD may call or purchase the CD at face value plus accrued interest. Most banks would buy back an equity-linked CD in a strong economy because despite the participation rate limiting the amount of gain in an equity-linked CD, a well-performing index could drive interest up to the cap limit for several years to come. Taxes may also be different with an equity-linked CD. Because unlike direct investments in equity securities, where you may pay less tax for capital gains or dividends, the interest paid on an equity-linked CD could be taxed as high as 35 percent. Liquidity is concern if in an emergency you need access to your funds. While you won’t lose your principal, you may lose some or all of the interest payable on your CD in the event of early withdrawal.

One last consideration is how to calculate the rate of return. Two methods exist, 1) point to point or 2) averaging. Point to point simply takes the index value date the CD was purchased and compares it to the index value one year later. The difference is the rate payable, subject to the participation rate and cap limit. The averaging method uses six month time periods to establish the performance figure. This usually benefits the issuer, because an average tends to smooth out performance returns that occur near the end of the term.

Clearly an equity-linked CD is more complex than a traditional CD, but it can offer security of your principal and a potentially higher rate of interest. It may also yield no interest if the index declines over the term of the CD. Make sure you understand the restrictions and penalties that apply before you invest in an equity-linked CD.

Banks offering Equity-Linked Certificates of Deposit:

Wells Fargo Bank

Union Bank

HSBC

Harris

Sovereign Bank