Certificates of Deposit and online banking question

Do any of you have CDs? My current institution (in another state) has shitty rates, so I wanted to possibly look into moving them to another bank (online).

Anyone use an online-only bank for CDs?

CD rates are so low I wouldn't bother. I have most of my savings in online banks, the interest rates are usually much better than in a regular bank.

Yeah, rates are so low right now it's just not worth having your money tied up for a few years.

Better to just put it in on online savings and earn a 1% or whatever and have access to the money if an emergency since CD rate's aren't much above that.

yeah online savings rates are close to what smaller credit union specials on CDs are right now - so I'd go with just regular online savings so you aren't locked in. I've had money in ING for many years and have had no problems with them. They have been owned by Capital One for a bit and are apparently going to see some bigger changes here very soon. There is also speculation on "unannounced" changes like new fees, lower rates, etc. http://www.nerdwallet.com/blog/2012/ing-direct-capital-one/

got my cash in a money market at .44% what sucks

Here are some current rates:

6-month: Ally - 0.74%
1-year: Ally - 1.04%

I currently have 6-month (0.35), and 1-year (0.50), which is why I want to move them.

My credit union has a 5-year at 1.65, which is pretty comparable to some of the other online banks.

Mine's in ING as well, hoping changes Capital One puts in place aren't major. I only have savings with them, so hopefully any changes in terms of fees will just be for the checking accounts.


ING's rates have already dropped a lot though, down to I think 0.75%. Was around 3% when I first signed up. So that really can't get much worse.

Damn. 3%? What kind of initial deposit did you need to get that rate?

[quote name='shieryda']Damn. 3%? What kind of initial deposit did you need to get that rate?[/QUOTE]
That was the rate like 6 years ago. It got as high as 6% since I've had my account from maybe 2004?

Yeah, that was just where the rates where 5 years ago or whenever I started. Was higher than that further back when they first started as dohdough note.

[quote name='shieryda']Here are some current rates:

6-month: Ally - 0.74%
1-year: Ally - 1.04%

I currently have 6-month (0.35), and 1-year (0.50), which is why I want to move them.

My credit union has a 5-year at 1.65, which is pretty comparable to some of the other online banks.[/QUOTE]

Those rates are terrible, plus Ally is an awful bank. I will never give GMAC any of my money personally.

You can get more than that from just having an online savings account. ING, Schwab, SmartyPig, etc all pay around (or higher) than that.

How soon do you need access to this money? If the answer is 12 months or longer, you might want to consider I-Bonds. They pay around 2.2% or so and are backed fully by the government. You cannot withdraw the money in the first year however.

You'll do better in a liquid Mutual Fund or most Bonds. Municipal Bonds are pretty attractive too. Depending on how much you can put in, you can find 5yr bonds in the high 3's and low 4's for $5k. Penalties for early withdrawl but as long as you're in for 50% of the term you'll still profit.

In the end, your best bet right now is blue chips with a decent dividend. Microsoft is affordable and attractive around $28 per share at the moment with a 3.3% dividend (currently $0.92 per share per year paid quarterly [divide $0.92 by 4]). Plus, Windows 8 means OS upgrades will be happening which leads to a steady income stream and who knows, surface might actually work. Granted your dividend income stream will be limited to how many shares you can purchase but it's taxed at 15% instead of CDs and Money Markets which are taxed at income rates so there's a 2nd advantage.
My favorite stock is OKS (natural gas pipeline) which has a very attractive dividend that isn't really a dividend. It's messy for taxes but very good to own. It's over $60 right now which is a bit high, but there's an established history of splits near $80 and they have a 4.4% dividend. I try to keep about $600 cash in my Fidelity account to buy as much as possible when it gets around $50. I've had them for maybe 7 years now and between dividends and splits my cost basis is something like $19 per share these days (meaning I'd profit roughly $40 per share if I sold today).

ING only has an APY of 0.75%. Am I missing something about this site?

Nope, used to be a lot higher as noted above.

Still better than most local or chain banks where you're lucky to get 0.1% these days though.

There's just not really many good, no risk ways to make a return right now. Best to just get a savings account for a nest egg (emergency found, house down payment etc.) and put the rest in your retirement accounts, kid's college funds and other long term things these days unless your an investor type and up for researching and buying individual stocks etc.

Bonds are another option posted above though.

I have a 403b through ING, so I really just need to do something with the Credit Union accounts. Might call ING about a savings account, though, and also research the mutual bonds. I'm not much of a risk-taker.

Thanks, everyone.

I have to agree with nasum, invest it in a trusted company with a good dividend. Won't be a huge return, but it will be better than something like a savings account.