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Ally’s 5-Year CD Yields Short-Term Gains

Posted in CD Rates by DealMaven
June 22, 2010 09:59 AM - 3 Comments

A long-term CD 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.

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

Ally’s 5-year CD pays 2.95% APY, or about a quarter-point less than the best 5-year CDs.

But Ally has the least costly early withdrawal penalty in the business — just two months worth of interest.

Cash in after just one year and the effective rate would 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 a whole lot better than the 2.02% APY you can earn with the best 24-month CD.

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    on June 22nd at 10:02 am

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