UPDATE: Citibank has lowered the rates on its 6 month CD. Please check the Citibank website for the most up-to-date rates.

Citibank is getting a bit more aggressive with its rates and is offering a competitive 6 month CD paying 4% APY. There is a minimum balance requirement of $500 to open the account.

4% is competitive when stacked against the best 6 month cd rates.

As is expected from a large bank, Citibank has an all electronic process for opening an account online. You verify your identify by answering a few financial questions which they match against a credit report. Once you are verified, the account is opened and you can transfer money into it from another via using your checking account number and your routing number. Or, you can fund it via a credit or debit card.

• Compare rates on 6 month certificates of deposit (cds).
  

I've seen a lot of ads on tv recently for Bank of America's "risk free CD" so I decided to give it a look.

First, let me explain what they mean by risk free. The CD, like most CDs issues by banks is FDIC insured up to $100,000. What's somewhat unique about the CD is that it allows consumers to withdraw funds prior to maturity without being penalized. The penalty for removing a 9 month CD before maturity at Bank of American is forfeiture of 90 days of interest. On a 7 month CD the 2.6% APY is equivalent to a 2.57% APR. If you divide the 2.57% by twelve you get .21% yield per month. The CD compounds monthly. So, if you invest in the CD and think you might need to remove the money at some point, the ability to not pay the penalty will save you approximately .6% (.21% x 3 month penalty) in yield. In actuality, the dollars saved would be higher because we ignored the impacts of compounding.

But this brings up a bigger question. 2.6% APY is awfully low compared to some of the best 6 month cd rates or best 1 year cd rates. Dime Direct, a 4 star bank according to Bauer is offering a 5% APY 6 month CD and Washington Mutual (now JP Morgan) is offering a 5% 1 year CD. That's almost twice the yield.

If you want to invest the money at a high rate but keep the option of withdrawing the funds, there are a bunch of high yield savings and money market accounts that pay up to 4% APY. And you can even guarantee the rate in some of the money market accounts. Everbank offers a guaranteed 3-month rate of 4.65% on their money market. The rate then drops to 3.45% APY on deposits over $50,000 for a first year blended APY of 3.60% APY.

Overall, it's hard to get excited about Bank of America's Risk Free CD when the rate it pays is almost half that of the top rate banks. Until the rate comes up, we'd say enjoy the television commercials but look for a better rate elsewhere.

Everbank raised the rates on several of its Certificates of Deposit and now has the best 3 month CD rate and the best 6 month CD rate according to the BestCashCow rate tables. The 3 month cd is paying 4.02% APY and 6 month CD is paying 4.23% APY.

Everbank also offers a competitive savings account and checking account rates.

• Yield Pledge Money Market Account that currently pay a 4.65% 3-month Bonus Rate on the first $50,000 deposited and then 3.51% APY. Blended this generates a 3.82% First-year APY (up to $50K).
• FreeNet Checking Account that currently pay a bonus 3-month rate of 4.65% APY and then 3.45% APY on deposits over $50,000 for a first year blended APY of 3.60% APY.

Everbank appears to be in good financial health. Bauer financial gives it 3 1/2 stars for safety and soundness out of 5. In the second quarter of 2008, the bank reported record earnings from continuing operations of $18.5 milion, a 8% increase from the period last year.

• Learn more about Everbank products
• View Top CD Rates
• View Top Savings and Money Market Rates