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Today’s least-loved CD

By Sheyna Steiner ·
Tuesday, October 30, 2012
Posted: 11 am ET

A world without a variety of certificates of deposit would be like a world with only one flavor of doughnut -- plain.

Not only do CDs come in different varieties, some are selling like hotcakes because they may be more appropriate in today's low-rate environment. Even so, others are not.

Falling into the latter category are liquid CDs. They are the least popular type of CD these days, according to Jeff Currie, a financial adviser at Icon Financial Services in Boise, Idaho.

Liquid CDs have limited early withdrawal penalties. They typically allow you to access part of your deposit a certain number of times over the term of the CD. Terms and conditions differ between products, so savers should read the fine print to know what they're buying.

With regular CD rates already are ridiculously low, very few people want to sign up for a more flexible account that offers even lower rates.

"A liquid CD offers a noncompetitive rate but with no penalty. Rate is the key reason people are doing CDs, but rates are so low already, the demand for liquid CDs is nil," Currie says.

Liquid CDs typically have a higher minimum than traditional CDs as well, Currie says. Last year, Bankrate did a survey of rising-rate CDs and found that the minimum ranged from about $250 to $10,000 across financial institutions. The average minimum for a traditional one-year CD is $1,283.50, according to Bankrate's weekly rate survey.

Though yields on money market accounts backed by the Federal Deposit Insurance Corp. also have become almost meaningless in today's rate environment, there are plenty out there that put last year's liquid CD rates to shame. CD rates have only gone down since then. If you're interested, Bankrate's money market account rate tables can show you what's available.

Next week: What kind of CD do you think savers are most interested in these days?

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