Recently, my wife and I saved, then set aside some money for emergencies and long term saving stuff.  We thought a good place to park it would be in a CD (Certificate of Deposit) at a local bank, which worked fine for a while, but part way through we realized we actually wanted to use that money for something, so we pulled it out.  We knew there would be some fees for pulling it out early, but we didn’t realize how the interest accrued, and that if we would have left it in for 3 more days, we would have had a significant interest payment coming to us.  We forfeited the interest we would have received, plus the penalty for early withdrawal…call it a “stupid tax”.

But here’s what I wish I would have known before we started the aformentioned CD, if you’re looking for someplace to earn a little interest over the short term with any amount of money…check out an online money market.  There’s a plethora of banks and credit unions offering fairly high yeild interest rates, ours has hovered somewhere between 3-5.5%.  The nice thing with a lot of these money markets is, no minimum balance, no penalty for withdrawing money, and some even have check writing privledges. 

So lets see, the CD at the bank has a minimum balance (which is really high if you want a half-way decent rate), you can’t touch the money for 10 to 15 months or whatever your term is, and the interest rates often don’t even keep up with inflation rates.  Maybe they should be renamed “Certificates of Depreciation”.

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