cds

Chasing CD rates? Don't fear online bank

Don TaylorQuestionDear Dr. Don,
Is it better to go with a local bank that has a physical location, or are online banks safe? They are both FDIC-insured. I'm just kind of scared to do business and send money over a computer. I'm looking to invest in CDs.
-- Cindy Certificate

AnswerDear Cindy,
Bricks and mortar don't make a bank safe. A bank's safety is based on capital adequacy, asset quality, earnings (profitability) and liquidity -- known by the acronym CAEL. Staying within FDIC insurance limits also helps because an insured deposit carries the full faith and credit backing of the U.S. government.

You have alternatives when sending money to an online bank. You can send it via check, automated clearing house or wire. Regardless, there's an audit trail of your deposit. You trust the same electrons when you go to a branch; you just feel better about it because you have a person on the other side of the counter.

Use Bankrate's compare rates feature to shop for CD rates in your home market or to look for the highest rates available nationwide. Choose the financial institution that offers the best combination of convenience, safety and liquidity.

Get more news, money-saving tips and expert advice by signing up for a free Bankrate newsletter.

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