Get The Best CD Rate
How to Get the Best Certificate of Deposit (CD) Rate
Very often you want to renew a CD at your local bank even if it doesn't pay the highest rate. This article tells you how to make sure you get the best rate possible.
08/01/2006
First I check rates at Best CD Rates to get an idea of what is available.
Very often you want to have a minimum amount invested at your local bank so you can get free services. At my bank, with a $25,000 minimum, I get free:
- checking account with interest (small but something)
- notary public service
- safe deposit box
- Traveler's checks
- ATM
To me, it is worth a getting maybe 1% less than I could get chasing rates to have all these free services at a bank I can walk to from my house. Even so, I still like to try and get as high a rate as possible for my savings dollar.
I just locked in a 10 month, 5.76% APR CD at my local bank (5.60% straight rate). With a two year Treasury note currently paying 4.96%, this 5.76% APR is quite a deal.
My bank wanted to renew my 1-year CD at 4.71% automatically. They told me by letter that they would automatically renew my old, 1 year 4% CD for me and I did not have to do anything. Lucky for me, I know my bank has special promotional CD rates for odd periods to attract new money. After they have your money, they renew you at "regular rates" unless you go in or call and specifically ask to get another promotional rate.
Sometimes your bank wil require new money to get the promotional rates. If so, I simply move the old CD to my checking account and transfer in the same amount from my brokerage account to the bank to open the new CD for the better rate. After I get the CD, I move the money from my checking account back to my Brokerage account where I get a much better money market rate. Often you can save yourself the trouble if you simply tell them this is what you will do to get the "new money rate" for your "old money."
The lessons here for renewing CDs are:
- ALWAYS check for promotional rates for your bank online
- Check the CD rate survey at Best CD Rates
- Check rates offered for CDs by your online broker. I've had my bank match those also.
- Call and ask if they have anything better before you let your CD automatically renew.
More Information
Come join us in our Getting the best CD Rates Discussion Forum to discuss anything and everything to do with CDs.
Free Charts and Other Stuff
Since beating the market is hard for most to do, I recommend a "Core and Explore" approach to investing. Core means place 80 to 99% of your money into a CORE, buy-and-hold, no load, mutual fund portfolio and then EXPLORE with the remainder. To build your core portfolio, I suggest a diversified basket of index funds.
I welcome suggestions for future articles at Kirk's Market Thoughts.
Kirk Lindstrom:
DISCLAIMER: Answers & my words are general in nature, are not meant as specific investment advice, and do not necessarily represent the opinion of anyone but Kirk. Individuals should consult with their own advisors for specific investment advice.
