4% APY 7 Month CD at Bank of America - is it a good idea???

Question

Seems like a decent rate. Is this a good place to park about 10k? You have to keep at least 10k in. 3 months loss of interest for early withdrawl.

Answer 1

Yea that's a good rate. Even if the bank fails its FDIC insured.

You will earn about $230.00. Don't do it if this is all the money you have and you may need to access the funds. Otherwise you will pay a penalty, won't be worth it.

Answer 2

I definilty would do it, its 4,1%. I parked 25 k already.

Answer 3

4% APY is the yield you are going to earn if you compound your interest.  4% is not your rate.  Make sure when you sign the CD that is says you are compounding your interest so that you will earn 4%.  The rate you will actually be earning is 3.80 something.  They quote you the APY because it sounds better.  Ask up front what the rate is.  

This is a great rate.  I just thought you should know about the APY.

Answer 4

Its not bad, they had a 4 month CD two months ago and I parked a bunch in it while I watched the market.  I would think there are some good buys on stocks now tha might make you more than $200 in seven months.  I would look for a bank or other stock that has been pummeled, and traditionally gives a dividend, that is scheduled to report or pay the dividend in about a month.  For instance if you spent half and bought 100 shares of KMP, which pays a quaterly dividend of almost $1, you would have $100, plus about $4500 of your original cash to buy something else and do the same.  In six months you would earn the about the same as a CD.  It has more risk but if it appeciates, that is even more $$$.  Look for opportunities like that...there are others not just KMP...and full disclosure I own it for this reason.  Gas pipelines are not a bad investment for the next few years IMHO.