Best CD Rates - August 2010

It is almost August, and CD rates keep on falling (in most instances). And there really isn't much of a light at the end of the table for when rates will turn around. Here are some good picks that I rounded up.

Alliant Federal Credit Union - 1-Year at 1.75%, 18-months at 2.00%, 2-year at 2.25%. They pay interest at maturity only. They also offer these rates for IRAs. Membership is open to everyone through the National PTA. There is a one-time $25 charge.

Already have Alliant, try Fort Knox Federal Credit Union. 14-months at 1.75% and 23-months at 2.30%. They can pay interest monthly if you need the income and also do IRAs. Membership is open to everyone through the American Consumer Council/Kentucky Chapter. It costs $15.00.

If you don't like credit unions and want a bank, try Sallie Mae Bank. They have a 15-month CD at 1.55%. There is an online process to complete to open your CD.

As I noted above, it appears that we will have this low rate environment for quite some time. If you want to hedge against the possibility of lower rates (the longer the Fed holds Fed Funds at 0% to 0.25%, the lower rates will go) then consider a longer-term CD. We have a bank offering a 10-year CD above 3.10% APR with a 90-Day Early Withdrawal Penalty. If you take the penalty and close after 1-year, you would net above 1.90%. After 2-years, it would be above 2.50% and after 3-years above 2.60%. Now, I can't provide the bank information for free on this one, but the calculated rates are net of our fees. Do you see anyone else offering 2.50% for 2-years? The minimum for this is $50,000.

As always, be sure to verify rates, ratings, and FDIC/NCUA insurance with any institution you wish to make a deposit with.

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Chris Duncan is a FINRA Registered Representative. He works for Jumbo CD Investments, Inc., a leading CD research and placement firm. He specializes in helping clients find the highest CD rates nationwide. His clients include individuals, financial institutions, corporations, and public agencies.

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