Earlier this week a friend came to me excited about his new five-year CD with a rate of a little over 2%. Given what savings accounts were paying and because he did not want to risk principal, but rather just preserve and earn some interest on this money, he was committed to a CD. And, these days, this interest rate seemed great. As with any CD there are pros and cons, but the rate for a CD certainly is a pretty good one.
Fast forward to later in the week. My friend discovers Ally Bank’s 2.94 APY High Yield 5-Year CD. While less than 1% difference in APY doesn’t seem like much, it is almost 50% higher of a return and can add up over time. My friend knew this and was now kicking himself. For example, with $10,000 invested, going from 2 to 2.94 APY means $470 in more interest earned - with no additional investment risk!
So what to do if you’re looking for a CD and don’t want to leave money on the table? There are a few sources, but the one I like is Mint.com’s CD Comparison Tool. In fact, if my friend were to check it out he would notice two CDs that are currently offering an even higher APY than Ally’s – 3% (and $30 more on a $10,000 investment).
Even better, Mint’s CD tool even includes a calculator to change the term of the CD, amount invested and “Current APY” if you have one to allow you to customize your results.
For those of you who are not familiar with Mint, I’ll be writing a piece on it next week. In short, I use it often and love it.
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