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Banks turn to special CD deals

With interest rates on CDs and money market accounts remaining at a historic low and the stock market continuing its jittery roller-coaster ride, many people are wondering if there are any safe investments out there at all.

Stock market slumps, such as the most recent one triggered by European financial crisis and the failure of the budget deficit Supercommittee, normally send many investors to such safe havens as cash deposits and CDs.

But with the best CD rates only reaching a little more than 1 percent on a five-year CD, some investors are wondering what they need to do with their money. A one-year certificate of deposit--earning an average of 0.35 percent last week--brings home only $35 for a $10,000 investment.

And those low rates are not expected to change any time soon. The Federal Reserve has vowed to keep interest rates low for another 18 months or so.

One answer might be at your own neighborhood bank. According to the Pittsburgh Post-Gazette, community banks around the country are offering special rates on certificates of deposit.

Community banks are offering the special rates on certificates of deposits largely for people who maintain other accounts with them. So if you're desperate and want to use any edge you can get in this low interest rate world, check with your bank and see what kind of deals they can offer you.

Some banks are also offering greater flexibility on certificates of deposit. Ally Bank, for instance, has a no-penalty certificate of deposit that gives you the freedom of closing an 11-month CD at any time after seven days without paying a penalty. That should be enough to keep you out of a three-month or six-month certificate of deposit.

Ally and other banks are also offering bump-up CDs, which allow you to raise your rates at least once during the term of your certificate of deposit. Longer terms may allow additional bump-ups. Typically you have to take a lower interest rate to get these freedoms, but some banks are allowing additional deposits and bump-ups while still posting competitive interest rates.

Disclaimer:This content is not provided or commissioned by American Express. Opinions expressed here are author's alone, not those of American Express, and have not been reviewed, approved or otherwise endorsed by American Express. This site may be compensated through American Express Affiliate Program.

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