cds
Liquidity fears? Check out no-penalty CDs
The desire for flexibility
Ally Bank's no-penalty CD is a bit more typical in that you can access the money at any time for any reason. It's a nine-month CD with an APY of 1.65 percent. There is no minimum opening deposit. Other than the fact that it has a fixed rate, it's hard to tell it apart from Ally's high-yield savings account and money market accounts, which have variable yields of 1.7 percent and 1.65 percent, respectively."People value having the flexibility and the competitive rate," says Ally Bank spokesman Travis Parman.
Bank of America's nine-month, risk-free CD has an APY of 0.65 percent and a hefty $5,000 minimum deposit. Nevertheless, it beats the 0.5 percent return the bank pays on standard CDs with maturities of six to 11 months. The bank reserves the right to require seven days' written notice of your intent to withdraw money. If you can forgo the risk-free withdrawals feature -- and can tie up the money a bit longer -- BofA has a much more enticing 12-month CD with a yield of 1.4 percent. Again, the minimum deposit is $5,000. Both CDs are available only online.
SunTrust is another option, with a 10-month, no-penalty CD that pays 0.7 percent when funded with at least $2,000. The call center representative says that in many states you must have a SunTrust checking account to qualify for the promotional CD.
If liquidity is important, and you can tolerate a potentially fluctuating yield, consider high-yield savings and money market accounts. Some institutions, especially many online banks, reside in the high-yield world pretty much on a continuous basis and can be counted on for having yields that are well above average.
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