bank rates

Why An Achiever CD Looks Attractive

CIT Bank raised rates on its Achiever CDs.I last wrote of my angst over maturing MetLife Bank CDs.

I’m now thinking a CIT Bank Achiever CD might be a good home for some of my MetLife funds.

My interest was aroused when CIT tweaked rates upward this week on both the 12-month and 24-month options.

The former inched up from 1.08% to 1.10% APY; the latter climbed from 1.20% to 1.25% APY.

The 1.25% is now the best nationally available 2-year bank CD.

I’ve followed the evolution of the Achiever CD since CIT began online banking operations last year.

It’s a combination “bump-up” and “add-on” CD, providing onetime rights to increase the rate and add to the original balance. The minimum opening deposit is $25,000.

I like this CD because it allows a depositor to hedge simultaneously against both an increase and a decrease in interest rates.

(That master of hedging strategies, Jamie Dimon, is probably livid because Chase didn’t come up with this idea first.)

Anyway, the last time I had a lot of maturing CD money available, I passed on the Achiever CD and instead opened relatively small CIT 3-year CDs with fixed rates and no add-on feature.

At the time, I was laser-focused on locking in a minimum average yield on multiple CDs over a 36-month period — which I achieved.

Nowadays, while continuing to consider competitive long-term CDs (up to five years), I’m putting a portion of my funds in shorter-term maturities, protecting myself in the unlikely event the Fed changes its mind and increases the federal funds rate before late 2014. (That rate impacts what banks and credit unions pay on deposits.)

A 2-year Achiever CD would cover many monetary policy eventualities.

Right now, CIT doesn’t offer CDs online with maturities of more than three years.

Its current 3-year rate is 1.42% APY (1.44% for $100,000-plus balances).

I’ve recently noticed, however, that it sells longer-term brokered CDs through Fidelity and Vanguard.

For example, this week it’s offering a 5-year brokered CD with a 1.55% yield.

If I were in the market for 5-year brokered CDs now, I wouldn’t be interested in CIT.

I can get 1.80% from GS Bank USA and 1.75% from GE Capital Retail Bank and Discover Bank, all of which generally beat CIT on brokered CD rates.

But I’m glad CIT has entered the CD fray.

We savers are sorely in need of competition — however slight — for our money.

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