Fixed Rate CDs
A certificate of deposit is a time deposit issued by a bank or credit union that pays a specified rate of interest for a set period of time. A majority of bank CDs are fixed-rate CDs. This type of a CD pays a constant rate of interest for the lifetime of the CD. If market interest rates increase or decrease before the maturity date of the CD, the interest rate on a fixed-rate CD still remains the same. The advantages of a fixed rate CD is that investors will know exactly how much interest they will earn during the lifetime of the CD without worrying about interest rate changes by their bank. Investors also know that the principal amount of their CD investment will not change and is protected by federal insurance, as long the rules governing FDIC insurance are taken into account by the depositor. A fixed-rate CD has a penalty for the early withdrawal of funds, which typically ranges from ninety days to one year of CD interest. Investors who are researching certificates of deposit can find the best CD rates listed daily at MoneyRates.com.
What are Indexed CDs?
An indexed CD is a certificate of deposit issued by a FDIC-insured bank with a bank rate that is determined by an underlying index, a common benchmark or even the fluctuation of a foreign currency. Examples of indexed CDs, which are also called variable rate CDs, include stock market CDs, inflation-linked CDs, prime rate-linked CDs and foreign currency-linked CDs. While the solvency of the issuing bank is insured by the FDIC, the rates of return for depositors can be variable dependent upon the performance of the benchmark selected. Banks can be very creative when offering indexed CDs. For example, some of the types of benchmarks that are used by banks in setting rates for their variable rate CDs include the S&P 500 Index, the current prime rate in the United States, rates on Series EE Savings Bonds, the major stock market index in China and even the annual increase in the cost of college tuition. Many indexed CD offerings feature a partial participation rate on the upside potential of the benchmark, as well as capping the downside if the benchmark decreases. If interest rates on online savings accounts and money market accounts begin to increase in 2011 as economists project, expect banks to begin marketing more indexed CD offerings. Listed below are some of today's best indexed CD offerings from FDIC-insured banks. Check MoneyRates.com for the best bank rates and deals.
|
BANK |
TERM |
INDEXED RETURN |
MINIMUM |
| Peoples Bank | 35-month | Variable rate CD - the interest rate is indexed to the one-year US Treasury yield, rate will not fall below 1.50% or rate will not go above 6%. | $2,000 |
| Citizens First Bank | 1 year | 1-Year Prime Rate CD - rate changes when prime rate changes | $2,500 |
| Bank of America | 18-month | Opt Up CD with one time option after six months to increase interest rate on CD. Rate currently 1.10% APY. | $10,000 |
| Think Mutual Bank | 6-month or 1-year | Rate indexed to Treasury yields, resets every 90 days | $50,000 |
| First Bank Richmond | 3-yr, 5-yr, 7-yr, or 10-yr | Rate indexed to rate of Series EE Bonds, guaranteed minimum annual percentage yield | $1,000 |
| Ridgewood Saving Bank | 5-year | Dow Jones Industrial Average Indexed CD - rate indexed to DJIA, principal guaranteed against losses, earnings potential uncapped | $500 |
| College Savings Bank | 5-yr | The InvestorSure CD is a variable rate certificate of deposit indexed to the Standard & Poors 500 Composite Index. Unlike many investments, the InvestorSure CD does not risk principal. Should the value of the S&P 500 decline over the investment period, you will receive your full investment back at maturity. Investments held to maturity will also receive at least 85 percent of the average increase in the S&P 500 based on a formula*. InvestorSure CDs are issued exclusively by College Savings Bank through the Montana Family Education Savings Program. | $500 |
| PNC Bank | 18-month | Variable rate CD - indexed to 3-month Treasury Bill | $1,000 |
| Carolina First Bank | 13-month | Variable rate CD - pays a base rate which will increase if prime rate increases | $2,500 |
| Carolina First Bank | 30-month | Variable rate CD - pays a base rate which will increase if prime rate increases | $2,500 |
| East West Bank | 5 years | Chinese Renminbi-linked CD - interest rate tied to the performance of the Chinese Renminbi (CNY or RMB) relative to the United State Dollar (USD) | $5,000 |
| Brentwood Bank | 51-month | Variable rate CD - the return is determined by performance of the S&P 500, 1.61% APY minimum return | $1,000 |
| EverBank | 6-month | WorldCurrency Pacific Advantage CD - indexed 40% to New Zealand dollar, 20% to Hong Kong dollar, 20% to Singapore dollar, and 20% to Japanese Yen ** | $20,000 |
| Flagstar Bank | 1 yr | Smart Choice 12 Month Variable CD, one penalty-free withdrawal is allowed during the term of the CD | $500 |
| First National Community Bank | 1 yr to 5yr | Variable rate CD - the interest rate is calculated by deducting a pre-determined margin from the National Prime Rate | $1,000 |
| Harris Bank | 5-year | Variable rate CD - the return is determined by performance of the S&P 500, upside potential limited to 10% per year, 0% return if S&P 500 return is negative | $15,000 |
| CollegeSure | 3 yr to 22 yrs | Indexed to increase at the rate of increase in college tuition. Over the term to maturity of each CollegeSure CD, the APY is not less than the college inflation rate less 3.00%. | $500 |
| New Dominion Bank | 12 to 30 months | CD rates are indexed to the WSJ prime rate. The New Dominion Bank Variable Rate CDs pay a base rate of interest and then if the prime rate increases during the term of the CD, the rate on the CD increases accordingly. Terms from 12 months to 30 months available. | $3,000 |
| EverBank | 3-month or 6-month | WorldCurrency Petrol Basket CD - indexed 33% to Norwegian krone, 33% to British pound, and 33% to Mexican peso** | $20,000 |
| EverBank | 3-month or 6-month | WorldCurrency Commodity Basket CD - indexed 25% to Australian dollar, 25% Canadian dollar, 25% South African Rand, and 25% New Zealand dollar** | $20,000 |
| EverBank | 3-month | WorldCurrency Brazil Real CD** | $10,000 |
| EverBank | 6-month | WorldCurrency Mexican Peso CD** | $10,000 |
| EverBank | 6-month | WorldCurrency Norwegian Krone CD** | $10,000 |
| EverBank | 6-month | WorldCurrency New Zealand Dollar CD** | $10,000 |
| EverBank | 1-year | WorldCurrency Australian Dollar CD** | $10,000 |
| EverBank | 90-day | WorldCurrency Swiss Franc CD** | $10,000 |
* If return is negative during term of CD no interest is paid and investor receives only principal back
** Currency appreciation or depreciation applies if investor converts back to U.S. dollars.
Last Update: 9/2/10
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