Banking 
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Bank CD Rates

How much money do you have sitting in a savings account? $500? $1,000?

Do you have plans for that money? If not, it should be in a certificate of deposit at your bank. If your bank doesn’t offer good CD rates, then you should open a CD with an online bank and take advantage of their better interest rates. If you don’t think you have enough money, you’re wrong. You can open a CD at an online bank with a single dollar.

One dollar.

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 Banking 
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Highest Short-Term CD (Certificate of Deposit) Rates

(Updated 11/6) I’ve been keeping a list of the best CD rates for certificates of deposit in the 12-month to 18-month maturity range, figuring that’s typically the sweet spot for CD rates. If the CD maturity is too short, banks won’t give you a good rate because it’s such a short period of time. If the CD maturity is too long, the customer is taking on a lot more inflation risk than the bank is probably paying out for. However, short term certificates of deposit still have their place:

  • You’re setting up a CD ladder and you need CDs to fill up those short period slots.
  • You have funds in an account that currently isn’t earning the highest yield for savings, transferring the funds will take time and cut down on your interest earned… so you might as well throw it into a short term CD to get a better rate.
  • You simply don’t want to rate chase and open up a new account with each new online bank that offers a high rate, so you might as well hit up a short term rate with the bank you’re worth just to get a little extra.


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 Banking 
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Best CD (Certificate of Deposit) Rates

If you’re looking for the best CD rates, you’ve come to the right place. Below is a list of the nationally available best CD rates, updated every single day. I looked at the best rates available for CDs of less than 18 months and listed the ones with the highest rate. Typically the longer the term, the higher the rate, but for many online banks the best rates were for periods of shorter than 18 months. For simplicity’s sake, I put the cutoff at 18 months (some banks offer higher rates for longer terms). If you want shorter term CD rates, I have also compiled a list of highest short-term CD rates (less than 12 month maturities).

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 Banking 
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The Fate of GMAC Bank

GMAC Insurance Orange HummerDec 26. GMAC Bank was approved as a bank holding company but may have failed to clear a final hurdle to receive TARP funds.

GMAC, which stands for General Motors Acceptance Corporation, is the financial institution that offers loans to customers and dealers of General Motors, one of the Big Three seeking financial assistance this past week. In 2006, GM sold 51% of GMAC to some private equity firms, including Cerberus Capital Management LP (they also own all of Chrysler). GMAC Bank is a subsidiary of GMAC and GMAC is in a bit of trouble. ACtually, it’s in a lot of trouble. This week, GMAC ” sweetened terms on a debt swap designed to save the firm from bankruptcy and extended the deadline for a fourth time to lure more investors.” (Bloomberg) GMAC is trying to convert to a bank holding company so that it can get access to the TARP bailout funds, but is coming up short.

GMAC Bank, the subsidiary, is fine but it leads many to wonder what would happen to the bank should its parent, GMAC, fail. If history is any indication, everything should be fine. Lehman Brothers had a subsidiary bank, Lehman Brothers Bank, FSB, and according to Ken at BankDeals, the bank wasn’t included in the bankruptcy and is operating as normal. Lehman Brothers filed for bankruptcy in September of this year.

If you’re an account holder, your funds under the FDIC limits are perfectly safe. If you have over the limit, I would play it safe and get under the limit. There are no signs the bank itself is in danger but there’s also no reason to have above the FDIC limits ($250,000 through December 2009, otherwise it’s $100,000).

If you aren’t a customer and you are tempted by their certificate of deposit (CD) rates, I’d wait. I’m not a fan of opening accounts at struggling banks because if there is a problem, they often drop their rates immediately afterwards. CD rates don’t have to be honored when another bank assumes them following a failure. You can afford to wait a few weeks to see how things shake out.

I would expect that GMAC Bank will be fine, even if GMAC fails. If they aren’t, FDIC will protect your assets.

(Photo: femaletrumpet02)


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