Tuesday, January 29, 2013

Barclays 5-year CD

One of the best CDs currently available for taxable accounts (IRA accounts are not available) is the Barclays 5-year CD, with an APY of 1.85% and an early withdrawal penalty (EWP) of 90 days of interest. See Ken Tumin's blog post CD Rate Hike at Barclays at DepositAccounts.com for details.

You can get a slightly higher rate of up to 2.0% APY on 5-year CDs at other credit unions, but the low EWP of 90 days interest makes the Barclays CD attractive; if rates increase significantly over the next five years, it will cost you less to do an early withdrawal and invest at the higher rate, since most 5-year CDs charge an EWP of at least one year of interest. Ally Bank charges an EWP of only 60 days of interest, but their current APY for a 5-year CD is about 1.6%. If you hold the CD for at least a year, you come out ahead with the Barclays CD.

Another good CD to consider is a PenFed 3-year CD with an APY of 1.85% and an EWP of 180 days of interest. PenFed offers IRA accounts as well as individual (taxable) accounts.

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