CD Rates, Uncategorized

Getting some kind of return on your money is better than nothing. And although certificate of deposit rates aren’t as high as they’ve been in the past, you can take a few steps to earn some interest on your money now and possibly be able to take advantage of higher interest rates in the future.

A CD ladder can help you do this. You can take advantage of different CD rates and terms by spreading out a large sum of cash. For example, if you have $30,000 to invest, instead of putting it in one CD, divide it up and put it in four different accounts with different CD rates and terms.

Each time a CD matures, roll the money over into another CD. Hopefully, interest rates will have improved at the point you reinvest your money in another CD.

It’s probably easiest to build a CD ladder by opening multiple accounts at a bank that offers several CD rates and terms. But you can certainly shop around to find the best rates being offered by various banks and spread your accounts around at different institutions. Just make sure any bank where you open a CD is insured by the Federal Deposit Insurance Corp. (FDIC).

Money market accounts allow you to stash some cash where you can get access to it when you need it. Money market rates at Bank of Internet are currently 1.65% annual percentage yield (APY) for all account balances. Here are some of the details:

• Minimum opening deposit of $100
• No maintenance fees
• Free initial checks
• Write up to three checks each month
• ATM card available
• FDIC insured

You can make unlimited deposits to Bank of Internet money market accounts. You also can make an unlimited number of withdrawals or transfers to other linked Bank of Internet accounts.

There is a limit of no more than six pre-authorized, automatic or phone transfers during any statement cycle. If you go over the limit, you pay an excessive transaction fee for each withdrawal.

Bank of Internet uses the daily balance method to calculate interest on money markets. The bank’s money market rates can change at any time.

If you make a withdrawal from your money market at any ATM, you won’t be charged a fee by Bank of Internet. But you may still have to pay a fee to another bank for using its ATM.

You receive online statements for money markets and the bank keeps an archive of of them that goes back five years.

Money market rates are averaging 1.22% for deposits under $10,000. However, Nationwide Bank is offering rates of 1.7% on all of its money market accounts as of Oct. 26. Nationwide money market accounts include:

• Free online banking and online statements
• Free first order of checks
• Free ATM card
• Two free ATM transactions a month at non-Nationwide Bank ATMs; after that they are $1.50 per transaction
• Free transfers between money market account and other banks
• $1,000 minimum opening balance

The money market is required to have  a $1,000 minimum daily balance or an $8 monthly maintenance fee is charged. Money markets also allow six pre-authorized withdrawals during each monthly statement cycle. That includes telephone or electronic transfers, check, or point-of-sale transactions.

Nationwide Associate and Agency Banking Program members don’t have a monthly maintenance fee and are allowed a minimum opening balance of $250. They also get free transactions at non-Nationwide Bank ATMS, although there may be a surcharge from the ATM owners.

Nationwide money market accounts offer Federal Deposit Insurance Corp. (FDIC) insurance up to $250,000 per depositor through 2013.

Nationwide Bank is based in Columbus, Ohio, and provides a range of insurance and financial products. The company is rated A+ by A.M. Best.

Savings rates are averaging 1.48% APY, but you can earn a little more than that with a Capital One Direct Banking savings account. Savings rates on Capital one accounts depend on the account balance, and you need a minimum of $10,000 to earn a 1.6% APY. Other details of the savings account offer include:

• Free online transfers to and from non-Capital One banks
• No fees
• No minimum balance required
• Balances under $10,000 earn a 0.6% APY (as of 10/08/09)
• Savings are FDIC insured up to $250,000 per depositor

Savings rates can change at any time. Interest is compounded daily and credited monthly. There can only be six withdrawals during each calendar month. You cannot get an ATM card with this savings account.

It takes three business days for a withdrawal to be completed when money is transferred to another account. Deposits from external accounts are completed one business day after the transfer is initiated. You can deposit money into savings by online transfers, depositing a check, or wiring money. Accounts from several banks can be linked to a Capital One Direct Banking savings account.

Account statements are sent quarterly, but if there is activity in the account statements are sent monthly.

In financial news this week Federal Reserve officials said they don’t expect a change in interest rates anytime soon. Fed Chairman Ben Bernanke had indicated the Fed might raise interest rates sooner than expected.  Some economists think that a change could come as early as April.

Bernanke’s comments helped lift the U.S. dollar, which had been hurt by financial news on the economy that included a worrisome jobs report last week. The U.S. unemployment rate was 9.8% in September, the highest rate since 1983, according to the Bureau of Labor Statistics. The Senate may vote next week to extend unemployment benefits.

Not raising interest rates means that those who put money in savings accounts, certificates of deposit, and money market accounts will likely continue to see low rates of return on their money for some time to come. Currently, money market rates are averaging 1.31% APY, savings accounts are 1.48%, and one-year certificates of deposit are 1.68%.

Although savings rates remain low, it’s not a good idea to base your savings plan on moves in the economy. Stay consistent with your savings goals and continue to fund savings, money markets, and CDs on a regular basis to build up your nest egg.