Online 1, 2 and 3 Year CDs Look Like a No-Brainer

Online 1, 2 and 3 Year CDs Look Like a No-Brainer

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If we are heading into a recession as everyone is determining now, the safest way to move forward is to buy short term online CDs. Just stay below FDIC limits.

It is quite amazing how market psychology can turn on a dime, but it did with the employment numbers today.  Every analyst on CNBC now says that "the picture has darkened considerably." 

In a global recession, the stock market will be a bad place to be so it is a bad time to put new money to work.  So where can you put your cash.   

It becomes clear that the Federal reserve will now lower interest rates, maybe multiple times or maybe one large cut.  If you believe that the recession will be pronounced, then you buy long term Treasuries, but I believe that this will be very short-lived.  Therefore, I am looking for a place to put my money where it will continue to earn interest that keeps the money at a pace with inflation. 

Savings accounts will have falling yields as will money market funds.  Therefore, it is important to lock down some nice rates for a short period.

The 1, 2 and 3 year CD rates on seem amazingly attractive at the moment.  I recognize, however, that these rates are being offered by institutions like Countrywide and E-Loan because they are the lowest cost of funding their mortgages (they lack liquidity) and that these companies are also in jeopardy.  While it is important to chase yield, it is important not to be foolish and risk enormous life-changing losses.  Therefore, I am being very careful to keep keep my deposits below FDIC limits - spreading my money across several online banks listed here and setting up every account as a joint account with my wife in order to raise FDIC limits to $200,000 (as long as neither of us have other accounts with these banks and neither of us do).

Ari Socolow
Ari Socolow: Ari Socolow is the Chief Economist and Editor-in-Chief at BestCashCow. He is particularly interested in issues relating to bank transparency and the climate crisis. 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)
Rising Bank, a division of Midwest BankCentre 1-Year 3.70% APY with $1,000 minimum
Merrick Bank 1-Year 3.60% APY with $25,000 minimum
CFG Bank 1-Year 3.56% APY with $500 minimum
Bread Savings, a division of Comenity Capital Bank 3-Year 4.00% APY with $1,500 minimum
Rising Bank, a division of Midwest BankCentre 3-Year 3.85% APY with $1,000 minimum
KS StateBank 3-Year 3.75% APY with $100,000 minimum
Bread Savings, a division of Comenity Capital Bank 5-Year 4.25% APY with $1,500 minimum
KS StateBank 5-Year 3.80% APY with $100,000 minimum
M.Y. Safra Bank 5-Year 3.75% APY with $500 minimum

See More Online CD Rates →


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