4.56% 6-month CD at ETrade Bank

ETrade Bank raised the rates on many of its CDs. The best is a 4.56% APY 6-month CD. There's not much rate incentive for terms from 1 to 3 years. The 3-year CD's rate is only 0.19% higher. The 5-year CD rate is not bad at 5.15% APY. Below is a listing of all the CD rates as of December 7, 2005:

Term      APY    APR
--------  -----  -----
5   Year  5.15%  5.02%
3   Year  4.75%  4.64%
2.5 Year  4.73%  4.62%
2   Year  4.70%  4.59%
1.5 Year  4.67%  4.56%
15 Month  4.65%  4.55%
1   Year  4.63%  4.53%
6  Month  4.56%  4.46%
3  Month  4.05%  3.97%

All of these certificates of deposit have a minimum balance of $1K. You can fund the CD with an ACH transfer. The only drawback of these CDs is the early withdrawal penalty. It's equal to one-half the simple interest for the term of the CD, earned or unearned. For a 6-month CD that's only a 3-month interest penalty. But for a 5-year CD, that's a 30-month interest penalty. That's much worse than the typical 6-month interest penalty on most CDs of terms of 1-year or longer.