Jumping Into A One-Year CD Is Not Particularly Compelling Here

The best savings rates in online accounts is now in the 1 to 1.05% APY range. You may find a higher rate here on BestCashCow. You may also find a higher rate in brick-and-mortar banks or in credit unions. To boot, some brick-and-mortar banks are offering short-term incentives for current depositors to bring new money (for example, HSBC in New York is currently offering existing depositors a 5-month CD rate on new money of 1.30%).

Against this backdrop, online banks (and offline banks too) are offering one-year CD rates of 1.25%. Again, you may find a higher rate here.

If you were to purchase a 1.25% 1-year CD with $250,000, the maximum insured by the FDIC or the NCUA in an individual account, your 20 basis point increase over the 1.05% savings rate would amount to an increased pre-tax yield of $500 over the coming 12 months.

Interest rates on savings and money market accounts are not coming down in 2017 and are quite likely to increase. Even if they were to stay constant, $500 pre-tax is a small sum to receive for sacrificing your liquidity. Opt for online savings over online 12-month CDs here.