A 12 month certificate of deposit or CD is the best short term investments one can have. When money is tight you can have your money back after the 12 month period or upon maturity. It is not advisable to withdraw the money before its maturity period as most banks charges penalties for early withdrawal. However, check with your bank if you intend to open a 12 month CD and if there is any penalty for early withdrawal. It is best to know this bank policies before opening an account. Otherwise, you will end up paying these fees.
Many banks have been offering 12 months CDs, but only a few offer the highest CD rate. One year ago or in March 2011, Transportation Alliance Bank offered a 12 month IRA CD rate at 1.26%APY. No bank is offering this kind of rate for a 12 month CD today. If you know of one, please let us know.
Herein below are some of the banks offering the highest APY for a 12 month CD for March 2012:
1. Colorado Federal Savings Bank CD – 1.05%APY. The bank requires at least $5,000 minimum to open and interest payment option is quarterly. The bank charges early withdrawal fees equivalent to 3 months of interest if certificate term is one year or less. Automatic renewal is available with a renewal grace period of 10 days.
2. Ally Bank High Yield CD – 1.02%APY. Fixed rate is compounded daily and interest is paid at maturity. There is an early withdrawal fees equivalent to 60 days of interest. There is an automatic renewal with a 10 day grace period.
3. Ascencia CD – 1.00%APY. Automatic CD renewal and fixed rate is compounded monthly. Note there is a penalty for early withdrawal equivalent to 91 days of interest on the amount withdrawn.
4. Alliant CD – 1.00%APY. Alliant is a credit union that pays interest monthly or at maturity. The fixed rate is compounded monthly and there is an automatic renewal with a 10 day grace period.
5. Goldwater Bank CD – 1.00%APY. Fixed rate is compounded daily and renewal is automatic with a 10 day grace period.
All of the above banks are FDIC insured and thus accounts are covered by FDIC insurance up to $250,000.