There are only a handful of ways to earn “guaranteed” money on your investment and because the interest earned in an online savings account isn’t very high, it’s a good time to take advantage of CD’s. Certificates of Deposit traditionally earn higher interest than that of savings accounts because your money is locked in for the length of the term. The drawback, is that if you pull money out early, you all but lose the extra interest gained over the term of the CD.
Now just because a CD is supposed to offer a higher interest rate than online savings accounts doesn’t mean they have to. We’ve complied the 25 worst CD’s available from banks today, spread out over the five most common terms. If you have money to save, make sure you avoid these CD’s at all costs!
• Citizens Trust Bank in Atlanta, GA — .10%
• Heritage Bank in Willmar, MN — .20%
• Salem Five in Salem, MA — .35%
• State Farm Bank in Bloomington, IL — .35%
• MetLife Bank in Bridgewater, NJ — .40%
• Citizens Trust Bank in Atlanta, GA — .40%
• State Farm Bank in Bloomington, IL — .47%
• Heritage Bank, N.A. in Phoenix, AZ — .50%
• MetLife Bank in Bridgewater, NJ — .55%
• Fultdirect.com in Herndon, VA — .60%
• Capital One Direct Banking in Glen Allen, VA — .50%
• Heritage Bank in Willmar, MN — .95%
• National Bank of Kansas City in Overland Park, KS — .99%
• Centennial Bank in Fountain Valley, CA — 1.00%
• First Internet Bank of Indiana in Indianapolis, IN — 1.00%
• BankDirect in Dallas, TX — 1.20%
• Capital One Direct Banking in Glen Allen, VA — 1.25%
• Centennial Bank in Fountain Valley, CA — 1.45%
• National Bank of Kansas City in Overland Park, KS — 1.49%
• E-LOAN in Pleasanton, CA — 1.49%
• BankDirect in Dallas, TX — 1.30%
• MetLife Bank in Bridgewater, NJ — 1.88%
• Giantbank.com in Ft. Lauderdale, FL — 2.19%
• Domestic Bank in Cranston, RI — 2.21%
• Heritage Bank in Willmar, MN — 2.30%
If you’re in the market for a CD, you’ll want to start your search with some of the more prevalent online banks like Ally and Discover. The interest rates they’ll offer put the ones you see above to shame and you’ll have a little more freedom with an online bank than you would with the brick and mortar variety. You may also want to consider creating a CD ladder, if you have the funds to do so. Laddering a CD allows you to reap the benefits of a high interest rate, without having to lock all of your money away for a long term.
Certificates of Deposit are great ways to stay disciplined with your finances, while earning a decent interest rate on your investment. Like any investment, make sure you’ve done your homework on CD’s and their interest rates and I’m certain you’ll avoid all of the ones listed in this article.
Published or updated April 6, 2013.