You can earn far more from a top-paying savings account than you can from most short-term CDs.
The average return on 12-month certificates of deposit has fallen to a measly 0.77% APY, and the average return on 24-month CDs has plunged to 1.19% APY.
But Colorado Federal Savings Bank is paying 1.70% APY on its savings account.
A minimum deposit of $2,500 must be maintained to qualify for that rate, but the account can be opened online and is available to savers nationwide.
(Fine print: Although accounts can be jointly held, you aren’t allowed to name beneficiaries in the case of death, which is a deal-breaker for some.)
Although the Web site for this online bank based in Greenwood Village, Colo., says this is a fixed-rate account, we checked and that’s wrong.
Like all savings accounts, the rate at Colorado Federal is variable and could be reduced at any time.
But there’s no long-term commitment with a savings account, so if you become disenchanted with your rate, you can always withdraw your money and move on.
The next-best rates on nationally available savings accounts are:
1.60% APY from Bank of Internet, an online bank based in San Diego. You need only $100 to open an account and there are no minimum balance requirements.
1.50% APY from American Express Bank, the online bank owned by the credit card company. No minimum deposit is required.
1.50% APY from Ultima Bank Minnesota, with locations in Fosston and Winger, Minn. A minimum deposit of $1,000 is required and must be maintained to earn interest.
1.50% APY from Dollar Savings Direct, the online division of Emigrant Bank, which has dozens of locations in the New York City area. A $1,000 account balance minimum is required.
Most money markets currently pay less than savings accounts, with one notable exception: the Mega Money Market Account pays 2.00% APY and is available from three jointly owned banks in Oklahoma.
Compare these rates with the best savings rates from scores of other banks in our extensive database.
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