Incredible Bank has stopped offering its internet CDs. They're back to just offering its internet checking account. They had been offering top rates for terms of 1 year and 18 months. This looks like a common approach at Incredible Bank. Last summer they first introduced a 1-year CD which had a very competitive rate. Two weeks later it stopped accepting CD applications. These latest CD rates weren't quite as competitive, but at least they did last longer.
So if you're looking for a 1-year CD, what's your best choice as of March 17, 2011?
Best Rates at Credit Unions
For a 1-year CD available nationwide, the best rates are currently from credit unions. Connexus Credit Union continues to offer 1.75% APY, but this requires an active checking account. RTN Federal Credit Union is offering 1.55% APY, but this requires a $50K minimum deposit. Also, RTN doesn't make it easy to join for those outside of Massachusetts. Melrose Credit Union has the third best 1-year CD rate with a 1.41% APY.
Best 1-year CD Rate at a Bank
The best nationally available 1-year CD from a bank is now from CNB Bank Direct which is offering 1.35% APY for a minimum deposit of $25K.
Best IRA CD Rate for Terms Around 1 Year
If you're looking for an IRA CD, the best nationally available deal is at Dime Savings Bank which has been offering a 2.50% APY on a 15-month IRA CD. I have more details in my Dime Savings IRA review, and a reader described his experience opening this IRA CD in the comments of my weekly summary.
Best Deals Are Not Always Nationally Available
Sometimes the best rates are local deals from banks and credit unions. To qualify you have to reside in the bank's market area or be part of the credit union's field of membership. To find these, please refer to our CD rates tables. If your state isn't selected by default, use the "filter accounts" button to select your state. This same table also will show the best nationally available rates.
It's hard to believe these 1-year CD rates are so low. I remember back in 2004 when ING Direct savings account yield was stuck at 2.00%. I thought that was low.
Other Alternatives to a 1-Year CD
There is a way to get a higher rate for one year. It's a strategy that we've discussed many times. It involves taking advantage of long-term CDs with mild early withdrawal penalties. I reviewed the benefits and risks of these long-term CDs last year, and several readers provided their opinions in the comments.
Ally Bank remains one of the best choices for this strategy. Ally's 5-year CD rate isn't the best (currently 2.40% APY), but it has the smallest early withdrawal penalty (60 days of interest). In my latest post on Ally Bank CDs, I reviewed the rates when Ally's 5-year CD is closed early. If closed at one year, the effective rate would be around 2.00%. If rates stay low (or go lower), you can just keep the money in the CD.