bank rates

Ally’s 5-Year CD Still The Best To Short

Long-term CDs can still be a better short-term investment than the top-paying 12- and 24-month CDs.

You just need the right combination of a good interest rate and lenient early withdrawal penalty to boost your earnings.

Long-term CDs can still be a better short-term investment than the top 12- and 24-month CD rates.Our favorite for that is still the 5-year certificate of deposit from Ally Bank, the online bank launched by auto loan giant GMAC Financial.

It’s now paying 2.99% APY, which is down a bit from the 3.09% APY it was offering last month. But Ally still has the least costly early withdrawal penalty in the business — just two months worth of interest.

Cash one of these CDs in after just one year, and your effective rate would still be 2.50%. Not bad, when you consider that the best nationally available 12-month CD rate is just 1.80% APY.

Bail after two years, and the effective rate goes up to 2.80%, which is more than the 2.53% APY you can make with the best 24-month CD.

iGobanking, the online division of Flushing Savings Bank in New York, offers a slightly less lucrative alternative.

Although it’s paying a slightly higher rate of 3.25% APY on its 5-year CD, iGobanking withholds 6 months worth of interest for early withdrawals.

That means you’d earn an effective rate of 1.6% if you only held the certificate for a year, and a much better 2.45% if you cashed it in after two years.

Compare these returns with the best CD rates from scores of other banks in our extensive database.

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