Update: The 5.0% APY Online CD is no longer available and the rates quoted in this article are out of date – read this list of best CD rates  for current rates.
A month or so ago, Washington Mutual  (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  available, updated weekly). ING Direct’s  12-month CD is 4.00% APY  and HSBC Direct’s  12-month CD is 3.70% APY , 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 , 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  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 , 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 )