First Century Bank of Gainsville, Georgia has by far the best APY of three month CD interest rates available, standing at 1.35 percent at this time.

I’m doing a review on them because they are the best rates at this time for a place to put your short-term money, but also as a quick lesson in understanding the give-and-take related to good interest rates on safe investment products.

Normally when you’re offered the highest or close to the highest interest rate for safe investment vehicles, there’s a caveat that comes with it, and in the case of the 3-month CD from First Century Bank, that is a minimum deposit of $10,000.

There are other banks offering fairly close interest rates on 3-month CDs which require far less deposits. For example, there is one that offers a 1.10 APY which requires $0 for a deposit and no monthly fees (as of this writing). Another offers a 1.21 APY with only a $1,000 deposit required.

Banks can also offer 3-month CD rates that compete internally with one another; with smaller deposits required for a smaller interest rate.

Obviously if you have the capital on hand, there’s no complications as to the decision to make: the highest APY is the only way to go. But even then, as in the case of the 3-month CD from First Century Bank, there are other competitors who require a $10,000 deposit who have an interest rate far below the APY First Century has. So just because there’s a large deposit required doesn’t mean the interest rate is competitive. I’ve seen just today as I was writing this an $10,000 deposit only giving you 0.50 interest on a 3-month CD.

This isn’t rocket science, just ask a couple of questions when you’re searching around for the best performing short-term CD to be sure you’re getting the best rates you can. Don’t assume anything.

As far as the strategy of investing in a 3-month CD, the reason you do that is because of the unsurety of the interest rate environment we live in, along with inflationary pressures, which have already put the squeeze on consumers in regard to certain products and services.

A short-term CD allows you to get a decent return while keeping your money safe, and at the same time not tie it up in a way that inflation or rising interest rates make it a bad investment. 3-month CDs are one way you can protect yourself while building up your wealth a little and having your money available in a short time when interest rates and inflation start to rise.

Not only is Discover Bank offering a great rate of 1.90 APY on their 12-month CD, but includes a great provision concerning if you lose your job. In that case you can withdraw your money if you need it without any early withdrawal penalty. You need to open it by December 31, 2009 to get the benefits and rate.

Keep in mind concerning the job loss provision that it has to be involuntary, as you can’t just quit your job and then withdraw your money. But if you are terminated or laid off, suffer a strike or are locked out from work in any way, you get the benefit. A leave of absence, quitting or retiring doesn’t trigger the removal of the early withdrawal penalty. Still, a great feature in difficult economic circumstances.

For those who are self-employed at the time of opening a CD with Discover Bank, an act of God like a fire, property damage in general, inventory damage or closing of the business for fire or flood must be experienced to be able to withdraw your funds without a penalty for early withdrawal. For business owners or contractors you must have an account open for 30 days or after renewal to receive the benefit.

While this may sound restrictive to some, in reality if you operate in good faith these are very reasonable, especially considering the high rate of return offered and the possibility of a no-penalty early withdrawal under circumstances out of your control.

For employees, to qualify for the CD you must work at minimum of 30 hours a week, while if you’re a full-time student you can qualify if you’re 15 hours a week or more.

A minimum balance of $2,500 must be maintained to get the $1.90 APY and benefit of penalty-free withdrawal if you qualify and need it.

Considering the national average for a 12-month CD at the top 50 banks as measured by deposits is 0.70, this is a really great return.

Discover Bank also offers an 18-month CD at a 1.95 APY.

Ascencia, a division of PBI bank, offers a good return of 1.63 percent APY on its 6-month CD, based on a 1.62 percent return compounded monthly.

For an initial deposit the minimum is $500 and the maximum $250,000. All accounts are protected for up to $250,000. An extension of the Emergency Economic Stabilization Act of 2008, which increase deposit protection from $100,000 to $250,000 per depositor has now been extended to December 31, 2013 by Congress, and all CD accounts a Ascencia fall under those guidelines.

Here are some of the other CD rate offered at different maturities by Ascencia. All of these have a $500 minimum on the initial deposit and a maximum of $250,000.

1 Year CD (12 Months) 1.98% with a 2.00% APY
2 Year CD (24 Months) 1.98% with a 2.00% APY
2.5 Year CD (30 Months) 1.98% with a 2.00% APY  
3 Year CD (36 Months) 1.98% with a 2.00% APY 
5 Year CD (60 Months)  2.25% with a 2.27% APY

Notice that all of the CDs from 1 year to 3 years offer the same interest rate of 2.00% APY. Unless you believe rates will rise above that, the 1-year CD would be a better way to go. If you believe interest rates will decrease below that, a longer term CD would be better to invest in, as it would lock in a better rates.

Be sure you are committed to any of these CDs, as you aren’t allowed to withdraw any funds from the accounts for a 90-day period, and of course there will be the usual early withdrawal fees applied of you decided to withdraw funds after that.

A CD continues to be a good place to safely park your money, and the early withdrawal penalities are actually good for you, as it forces discipline on you unless you absolutely need the money in a major emergency situation.

While October was a poor month for CD rates, as almost all CD rates dropped, from 3-month CDs to 5-year CDs, TotalBank was still able to hang on with its Total e-CDs, to lead in the 3-month category, with a 1.64 interest rate for their online-only CD. CDs with a length of 3, 6, 9 and 12 months also offered a 1.64 interest rate, with a 1.65 APY when investing a minimum of $1,000.00.

Even though TotalBank has participated in the overall drop in CD rates for the month of October, they still continue to lead the way for 3-month CDs with the 1.65 APY they offer at this time. For all of October, 3-month CD interest rates dropped 3 basis points in the industry, which has experienced an overall plunge of 82 basis points so far in 2009.

Along with the fall in interest rates for 3-month CDs in October, 6-month CDs, 1-year CDs, 2-year CDs and 5-year CDs also fell from the month before, with the 6-month CD dropping by 9 basis point in October; the 1-year CD by 10 basis points; 2-year CDs fell by 7 basis points and 5-year CDs were off by 6 basis points.

For the 3-month CD, it fell from 0.64 percent to 0.41 percent for the month of October, one of the lowest levels in 20 years, as measured by a weekly survey performed by Bankrate during that time. 

Still, as measured in this economic climate, TotalBank continues to offer the highest-yielding 3-month CD on the market, which is has done over the last four months.

Long-term CD rates fell faster than short-term CD rates, but even so, they are still standing at record lows.

I would still look at investing in short-term CDs or other short-term investments going forward, as it relates to safety, as long-term, safer investments could and have been getting clobbered in this low-interest rate environment.

So with the money you’re investing to protect and hold, a short-term CD like the 3-month CD offered by TotalBank is a good way to go at this time.

Hudson City Savings Bank (OTC:HCFB) which serves the Connecticut, New Jersey and New York markets, is now offering some of the best CD rates in America, paying out 2.50% APY on 24-month certificates of deposit and a 3.00% APY on 36-month CDs.

As far as I’ve been able to find, there are no other banks that offer higher CD rates than this, although Flagstar Bank is offering the same interest rates on their 36-month CDs.

Here are the current terms of the CD as of this writing:

• 3.00% APY 3-Year CD ($5,000 minimum balance)
• 2.50% APY 2-Year CD ($5,000 minimum balance) 
• 1.75% APY Internet Money Market Savings ($2,500 minimum balance)

If you want to invest in the 3-Year CD, it’ll cost you $5,000, but if you live in the three states Hudson City Savings Bank serves, you can get in as low as $500. 

There are no other local limitations, and you can apply for the CD at the national level, i.e. it doesn’t matter where you live in the U.S., you can get in on the great interest rates.

Hudson City Savings Bank has been named as “The Most Efficient Bank” more than once, which allows them to offer better rates than the majority of their competitors, as you can see with the CD rates I mentioned here. They have 125 branches in the 3-state area they physically operate in.

CDs acquired from Hudson are insured by the FDIC for up to $250,000 until the end of 2009, where, along with all banking investments, will revert back to the former $100,000 per customer, unless that is changed. For now that is the known circumstances concerning insuring all banking accounts under the FDIC umbrella.

Do go to the bank’s web site to confirm the CD rates, as then can change quickly. But as of October 2, the CD rates stand as I’ve written here.

WTDirect is among the top five percent of U.S. banks for savings rates, and they even give you a chance to test drive the account with no risk to yourself.

At the time of this writing, opening a savings account with WTDirect gives you a return of 1.66 APY for the first two months no matter how much you put in the account to begin with. Once that two-month period is over, you then must maintain a minimum of $10,000 in the account to get the highest savings rate.

That’s a nice feature because a number of banks bring down the interest rate in a savings account as the account gets bigger.

There is also no restrictions on needing have a checking account with the company in order to have a savings account with a higher interest rate. Another nice feature is there is no minimum amount needed to open or maintain an account, and no fees regardless of how much money you have in it.

Also included is the current FDIC guarantee of up to $250,000 for your savings. As with all U.S. FDIC-guaranteed accounts, that will revert back to $100,000 as of January 1, 2014.

What’s nice about this for savers, depending on how you like to do your banking business, is this is one of those built-in savings accounts which can work good for those not concerned over moving their money in and out of an account. For two months you can get a good return with no minimum amount in the account, and no fees.

And if you like your experience, and have $10,000 available, you can always just keep your money in the WTDirect savings account if you choose to in order to get the higher interest rate.

You are also allowed to transfer any of your funds between your WTDirect savings account and other financial institutions you use; something not all banks allow.

On the heels of its successful first quarter strategy of offering new checking account customers signing up for a Premiere or Interest Checking Account, Sovereign Bank is again offering $100 during the second quarter for those successfully opening a new checking account with them.

There are several thing a potential customer must do in order to qualify for the $100 bonus for opening an Interest Checking Account or Premiere Account. Here is what those steps to take are to get the incentive:

1. To qualify, you must open a new Sovereign Premier Checking, Business Owner Premier Checking, Interest Checking or Partnership Checking account by October 30, 2009, with a minimum opening deposit of $100;
2. The next step you must take is to ask for a Sovereign CheckCard (”CheckCard”) and make a minimum of 2 CheckCard purchases within 60 days after you open your account;
3. If you already have a savings or money market savings account, this next step won’t be necessary, but if not, you need to open any Sovereign savings or money market savings account with a minimum opening deposit of $100;
4. Finally, you must enroll in Online Banking at the time of the account opening. When you qualify, you will receive a credit of $100 to your new checking account within 75 days after you open your checking account. There is only one $100 credit allowed per customer.

No matter whether we’re living in tough or good economic times, it’s always best to take advantage of every type of additional source of income and interest we can in our personal finances and bank accounts, and even though a checking account interest rate will never be that high, it’s something we get for simply following the terms of service from the financial institution or bank.

In this case, the $100 dollars also has a great incentive to grab a checking account from Sovereign Bank. Another reason? According to Global Finance Magazine, Sovereign Bank is among the ten most safe banks in the world, another reason to seriously consider opening an account with them.

After declaring bankruptcy, GMAC has re-branded itself as Ally bank, and in efforts to generate new customers, is offering high yield savings account with a rate of 1.73 percent, and an APY of 1.75 percent, as of this writing.

There are several other features of the High Yield Savings Account at Ally Bank which also make it attractive:

• You can open an account with $0
• There are no minimum balances required
• Interest is compounded daily
• All accounts are insured by the FDIC
• No monthly fees

Do remember that the no monthly fees is based on usual practices. If you exceed 6 withdrawals or transfers within a statement cycle, you would be charged $10, and if a deposit item is returned, there is a $7.50 fee. Don’t be put off by the 6 withdrawal or transfer rule, that’s actually mandated by federal law, and all savings accounts have it.

But as far as minimum balances and normal use of the savings account, there are no hidden fees, which can give you peace of mind in contrast to other banks’ High Yield Savings Accounts which many times penalize if you drop below a required amount.

In contrast to most other large banks, this is a great interest rate and deal, as I couldn’t find a better savings rate for a no-minimum bank in America.

Slightly different from your typical savings account or online savings option, FreshmanFund.com makes it easy to set up gift registries for your children’s college savings. Just as newlyweds or moms-to-be can create gift registries of items they need or want for their big day; you can set up registries for your children and prepare for their higher education expenses while you still have time to take advantage of compounding interest!

Money held in a FreshmanFund.com registry itself will not earn interest – however, the idea is you create the registry through FreshmanFund to enable easy contributions of gifts to the child’s educational savings plan, and then you connect the FreshmanFund registry with a 529 Savings Plan. When a FreshmanFund gift registry is connected with the child’s 529 plan; contributions made to their FreshmanFund registry will automatically transfer to the 529 plan in order to benefit from the interest earnings of the 529 plan. If you don’t already have a 529 Savings Plan, you can open one in a matter of minutes with SavingForCollege.com; or check with your trusted financial advisor for advice. The 529 Savings Plans are managed by the state you live in, so the requirements and specifics will vary slightly from one state to another. Most states have very low minimum deposit requirements (as low as $25) which makes it very easy to set up and start saving for your children’s future!

Gifts to a FreshmanFund.com registry can be made through bank deposits. credit cards, or through special gift certificates. A gift certificate from FreshmanFund is a great way to encourage someone to start a college savings plan for their children since it can only be redeemed through opening a gift registry account with FreshmanFund. The money can then be transferred to a 529 plan whenever the recipient opens one.

One of the most difficult aspects for graduating college students isn’t passing an mensa test and being smart enough for your first job, but instead entering the “real” world burdened by debt. From student loans to credit cards, students graduate with their degrees in hand and the weight of excessive monthly payments on their shoulders – and often the income earned in the first few years out of school will not match the amount of their debt repayments and living expenses. You can help a child graduate with less debt simply by contributing to their college fund while they’re still young children. Taking advantage of compounding interest over time, a young child who reaches their college years with a 529 savings will require far less in loans than a child who did not have a 529 plan.

Many people want to save more money but either lack the discipline or the time to set up a savings account. There are still others who have the discipline and time but think they have no available money to put toward savings. In reality with the exception of people facing a severe financial hardship, everyone should be able to cut costs and find money to save in their current budget.

Wachovia is offering a way for these consumers to save money with little to no effort on their part. The Way2Save program offers an excellent way to jump start your savings or put something aside for a specific goal such as holiday gifts or next years vacation fund. While there are some limitations (you won’t fund your retirement with this program) you can certainly benefit by saving money for short term goals. Here is how it works.

In order to participate in the Wachovia Way2Save program you must first have a Wachovia checking account. Wachovia offers a free checking account so this should not be an obstacle for persons not able to meet minimum fund requirements for other checking accounts. In fact you may be eligible for a sign on bonus by opening your free checking account through Wachovia. Once you have your free checking account opened you can then sign up for the Way2Save program. From there you can save money in two ways. 

• Each time you use your Wachovia check card for purchases they will automatically transfer $1 into your Way2Save account. This also happens each time you use your check card to pay a bill online or set up automatic debits.

• To really build your savings quickly you can also request an automatic transfer from your checking account up to $100 each month.

While it might not seem like a lot of money you will be surprised how quickly it can add up. In addition to painless and effortless savings, you will also benefit from a 5% bonus (up to $300) on your savings at the end of the year as well as 5% Annual Percentage Yield. It is important to note that after the first year the bonus as well as APY drops to 2%.

This program is ideal for people just opening checking and savings accounts. You not only receive a sign on bonus for a free checking account, but you begin to build your savings without even thinking about it. At the end of the first year you may want to withdraw or transfer your savings to a higher interest rate account. Until that point you can take advantage of a great bonus and APY without changing your current banking practices.