CD interest percentages vary by bank and term length.

Certificates of deposit, often referred to as CDs, are time deposits.   Certificates of deposit are defined as low risk investments provided by banks and other lending institutions.  CDs are when you give your money to the bank and promise you won’t touch that money for a specified amount of time in exchange for a specified rate of interest. You are virtually loaning money to your bank.

Generally the longer you agree to lend this money to the bank, or term of your certificate of deposit, the more interest is paid to the investor.  Historically the best rates for CDs will pay the investor more than the typical high yield savings account.  Online banks are providing some of the most competitive interest rates for certificates of deposit.

Recently the financial industry has seen the rate of personal savings increasing while consumer spending has been down.  As interest rates continue to drop many depositors are becoming discouraged with savings accounts and other types of low risk investments. Investors are feeling as if they aren’t getting a good value for their money. Many are considering simply getting a certificate of deposit because they are tired of the falling interest rate for their monies that are sitting in a savings account. Some of the best CD interest rates can be found with online banks.

The current rates of CDs have also fallen, but they are still higher than almost all savings accounts. There are still some corners of the market where you can find a decent interest rate for a CD if you know where to look. If you are an investor looking for the best interest rates for your CDs, you can find them at a couple of different online banks.

Coming into the last quarter of the 2011 calendar year, some CD rates have dropped since October 1st.  However, there are a few great rates left with online banks for your CD monies.

Ally Bank

Ally Bank is rated one of the best banks all around, including online banks. They have a wonderful rate for their six month and 12 month CD which is 0.43% and 1.09% respectively. With no minimum balance Ally Bank is extremely appealing.  Their online savings account has .99% at this time. There doesn’t seem to be much difference between the savings account and certificate of deposit. However, once your CD is purchased the APY will not change like a savings account which can vary.

EverBank

EverBank has a minimum requirement for their CDs of $1500. The 6 and 9 month CD pay the same APY of 0.50% and the 12 and 18 month pay the same APY of 0.80%.  EverBank has a savings account interest rate of 0.76%. The 60 month CD that has the same $1500 minimum buy in for CDs pays a competitive rate of 1.91%.

ING Direct

ING Direct has CDs offered without a minimum buy in amount. The 6 month APY is the same as the 12 month APY at 0.75%. Although ranked one of the best banks overall for various investment products including their CDs, ING Direct has the same rate of interest for their 24 month CD also. The savings account is paying out better than their CDs at these maturity dates. Savings accounts have an interest rate of 1.00%. The 30 month CDs to 60 months all pay over the 1.00% APY.

These are the top three online banks offering the best rates for certificates of deposit.

Unless there is another major financial meltdown, you can bank on CD rates increasing over the next 24 months so Ally’s upgradable CD is a good way to earn a good rate now without having to worry about not being able to participate in rate increases over the next two years.

Just for comparison sake, Discover Bank is offering a similar 24 month CD with a minimum deposit of $2500 which won’t let you upgrade and Ally’s CD is only .1% less and both banks are in the top 10 best nationwide CD rates according to BankRate.

Ally Bank is FDIC insured and compounds interest daily(you earn interest on your interest) so you money grows faster. Unlike Discover’s CD, Ally Banks CD requires no minimum deposit or balance to earn the 1.90% APY.

Ally charges you no monthly fees and for 10 days after opening your account if their rates increase, you automatically qualify for the better rate – it’s called the Ally Ten Day Best Rate Guarantee.

Warning: if you sign up for this CD, it will automatically renew at maturity so if you want to withdraw the interest as income or want to cancel the automatic renewal, you will need to let Ally know before the maturity date or 10 days after. If you need the flexibility of being able to withdraw your money, Ally Bank Money Market has a high interest rate, with debit card and checking.

Ally bank is one of the best online banks and we have written a comprehensive Ally bank review. You can also learn more about Ally Bank in our Video Review. If you like Ally Bank’s CDs, you will probably like Ally Bank’s Savings Account. Also, we now have an Ally Bank Rating page where you can see our staff ratings and user ratings.