Dedicated to Deposits: Deals, Data, and Discussion

Survey of Special High-Yield Low-Cap Certificates of Deposit & Savings Accounts

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Several credit unions have been offering special CDs and savings accounts with very high yields but with low maximum deposits. These are often new-member specials or youth CDs. Instead of having multiple posts on all of these, I thought I would just have this one post. If you've seen others that I've missed, please leave a comment.

To measure the value of one of these CDs, I compare it against an online savings account. For today's rate environment, I'll use 2.00% APY as a respectable yield. I then compute how much extra someone would earn in one of these CDs compared to the savings account. Here's an example.

Assume a 6% special 3-mo CD with a maximum deposit of $1,000. Here's how I compute its value:

Interest rate advantage = 0.06 - 0.02
= 0.04
Extra earnings for 1yr = $1,000 * 0.04
= $40
Extra earning for the
specific CD term = (3mo/12mo) * $40
= $10

In the above example, you'll only earn $10 over what you would have earned if you had just kept the money in a 2.00% account for those 3 months. As you can see with a low maximum deposit and a short term, this kind of special CD could be more trouble than it's worth. These deals have become a little more valuable since interest rates are so low. Last year I was comparing these deals to a 3.75% savings account.

Below is a list of some promotional savings accounts and CDs that I've been able to find. All yields are based on APY. The extra amount is based on what I described above. If you've seen others, please leave a comment.

Nationally Available:
  • 5% 12-mo Way2Save with 5% year-end bonus (extra $78) at Wachovia (the only bank on the list). This is more of a savings account than a CD. By setting up 12 monthly automatic transfers of $100, you can easily make an extra $78 over the first year (my account review)
  • 7% 12-mo CD $1K Max (extra $50) at Patelco CU. In CA, but with easy membership (my account review)
  • Update 6/22/09: This 8% account is no longer available. 8% Youth Savings thru 1/1/10 $1K Max (extra $40) at Patelco CU. In CA, but with easy membership (my account review)
  • 5% 5-mo CD $5K Max (extra $62) at People's Trust FCU. In TX, but with easy membership (my account review)

Locally Available:

Related Pages: CD rates

Related Posts

Comments
5 Comments.
Comment #1 by Anonymous posted on
Anonymous
Apple FCU is offering a 7% 7 Month Certificate that can be opened at its Sterling VA Branch only. This has a maximum $2000 deposit. One Certificate per household. Offer has been available since February 24th and ends on April 23rd.

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Comment #2 by Anonymous posted on
Anonymous
Thanks for the analysis Banking Guy!

1
Comment #3 by Anonymous posted on
Anonymous
We may as well take advantage of these "little" CD's. Their interest rates are high, so why not? I did!

These smaller CD's are helping my children to learn the advantages of getting the highest possible APR's now, so that their money can grow more quickly. It also teaches them how compounding interest works. It's a good learning tool.

Keep up the good work Banking Guy!

We all know that Ken puts in many, many hours to help us out. If you feel inclined to show him a little gratitude for all of his hard work, you may not know that in the upper right hand corner, there is a "Tip Jar." [It's the fifth green bullet from the top.] Ken spends many, many hours on this site with results that we all can use to make more money with the investments that he finds, rather than if we had not visited his site at all. [If we made some money through this site because of the information given to us by Ken, let's give Ken some small part of it. It's the fifth green bullet down; the “Tip Jar.”] I think that Ken would agree with me that no donation is too small and it is greatly appreciated! Of course, I bet you that he would also agree with me that no donation would be too to large either :-) You may seriously want to leave him a little something if you have benefited from his site.

Let him do the hard work and let us reap the benefits. But also, let us not be so tight-fisted that if we find a good deal on Ken's board we refuse to send him a tip.

Thank you Ken!!! Keep up the good work!!!

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Comment #4 by Duck (anonymous) posted on
Duck
Has it realy come to this it allmost makes me want to cry. The people here are the only one's being hurt I saved my entire life only to have it turn to trash by people that did things they should'nt have ie: mortgages(how stupid can you be to sign something you dont nderstand or be talked into something you can not afford))banks (Again how stupid if they aint got any money or income don't give them any)== We the savers are paying the price for years to come. It is So Sad

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Comment #5 by Anonymous posted on
Anonymous
Banking Guy - Thanks for breakdown!About your TipJar
Can post how much short you are on your monthly costs like server, bandwidth, etc.

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