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Update: The 5.0% APY Online CD is no longer available and the rates quoted in this article are out of date – read this list of best CD rates ^[3] for current rates.

A month or so ago, Washington Mutual ^[4] (WaMu) offered a 5.00% APY 12-month CD, one of the best interest rates on a 12-month CD available (I wrote a post listing the best CD rates ^[3] available, updated weekly). ING Direct’s ^[5] 12-month CD is 4.00% APY ^[6] and HSBC Direct’s ^[7] 12-month CD is 3.70% APY ^[8], WaMu is offering a rate that’s a full point higher for the same term. (If you check Bankrate’s list of CDs, the national overnight average is 3.69% APY, WaMu’s CD isn’t even listed)

Right now I have some CDs at ING Direct because I laddered our emergency fund ^[9], but the rates are all in the 3%’s only recently have they gone up. The rates these days are far more competitive and I’ll be opening a WaMu ^[10] account so I can take advantage of the one-two punch of a high yield checking/savings account combo and this 5.00% APY CD.

While I’m pretty sure you don’t need a checking/savings account to open a CD, I think it’d be easier to use their 3.75% APY checking account as a holding account. It certainly trumps my piddly 0.00% APY checking account for sure. Plus, having a checking account there costs nothing (except time) and it makes it easier for me to move things around if WaMu keeps things competitive.

Details of the offer:

• 12-month and 13-month terms offer 5.00% APY.
• Here is a detailed listing of their fees ^[11], though I don’t see anything about CDs.
• The minimum to open a CD is $1,000.
• An early withdrawal penalty applies, though I couldn’t find it. I’d bet it’s the standard 90-day interest lost.
• The account is managed entirely online, you won’t be able to visit a branch to open one.

(Photo: thetruthabout ^[12])