Using CDs for Short Term Savings
Have you ever considered a Certificate of Deposit (CD)? I’ve never used one myself. About the time I had significant short-term savings built up I found out about high-yield savings accounts. CDs and their restrictions seemed like a product of the past. Of course, you can achieve both flexibility and high-interest with a CD laddering strategy. But that takes a bit of discipline and patience to get that up and running. So, for the past few years it’s been high-yield online savings for me.
But let’s be honest, things have been pretty stale lately in the online savings world. It hasn’t been fun watching interest rates plummet to almost 1.00% at most banks. Everyone is searching for a better place to put their short term cash flow. Most recently, the rate drop at Capital One 360 has prompted me to consider another account. While I like Capital One 360 for most of my savings goals, I can see myself moving the emergency fund from their to Ally.
Ally Bank’s No Penalty CD
I recently reviewed Ally Bank’s products. One of the CDs they offer is a “No Penalty” 9 month CD. I can’t stop wondering whether I should move our cash to one of these no penalty CDs for a while. The CD is FDIC insured, has no fees, and doesn’t have a minimum balance. The best part about the CD is that it combines a decent yield with the flexibility (to withdraw without penalty) that you get from online high-yield savings.
- Open up a no penalty CD with Ally Bank or find another high-yield CD product.
Have you moved to the No Penalty CD? If not, where are you getting your short term cash return from?