There are a few online banks offering 2% but online banks seem so intangible, as long the bank is FDIC insured it should be safe–right? Any you would recommend?
Terry Says: I have no concern with online banks, which save the costs of having branches. But you must remember a few things. First, make sure it is an FDIC insured CD that you are buying, not some kind of “note” or other instrument. Second, check the penalties and requirements. Some will pay the full percentage amount, only if you extend your CD for another period beyond the initial promised one. And third, remember that in the time it takes you to “wire transfer” the money to your online account and back to your own bank at maturity, you could be losing interest — and paying wire transfer fees — that negate the benefit of the slightly higher rate.