Introduction
What is an 18 months CD?
An 18 months CD is a type of deposit account from which you can earn a fixed amount of return on your deposits. In this you have to make a one time deposit and after 18 months you can get the funds without being charged any fee.
Best 18 months CD rates
Alliant credit union
It has a CNET score of 3.9 out of 5 and offers high yield and jumbo CDs. The Alliant bank provides different types of accounts such as savings account, checkings account etc.
Community wide federal credit union
In this account you need to deposit a minimum amount that is around $1000 and a processing fee of $4.95. The bank also provides high yield share certificates.
Barclays
The CNET rating of Barclays is 3.9 out of 5 and a big advantage of this is that you don’t have to deposit any amount of minimum deposit. It only offers high yield CD rates and charge penalties such as early withdrawal penalties.
Synchrony bank
It has a CNET rating of 4.5 out of 5. It offers high yield and jumbo CDs and IRA CDs for retirement. This bank provides checking and savings accounts for teens and kids also. You can get upto $20 reimbursement for out of network ATM surcharges.
Marcus
The CNET rating of this bank is 4.4 out of 5. It offers no penalty, high yield and bump up CDs. This bank does not provide a checking account and charges a minimum deposit of $500. There are many other disadvantages of this bank such as it does come with an ATM network and also does not offer money market accounts.
Ally bank
It has a CNET rating of 4.6 out of 5 and you don’t need to deposit any kind of minimum deposit amount. This bank is a very famous bank and is preferred by all when it comes to opening a CD. It provides high yield checking accounts, savings accounts, money market accounts etc.
CFG bank
The CNET rating of this bank is 3.9 out of 5 and offers only high yield CDs. You can open money market accounts as well as savings accounts.
There are many checking accounts which provide you around 2000 ATMs. Also the fees charged by this bank is greater as compared to that of other banks. For example, it charges an overdraft fee of $25 and a monthly maintenance fee of $2 – $10.
Capital one bank
It has a CNET rating of 4.7 out of 5 and does not require any minimum deposit. It offers only high yield CDs and the terms range from six months to five years. But the CDs cannot exceed $1,000,000 and they also charge you early withdrawal penalties. You can open the account at a physical branch and online as well.
Getting the best 18 month CD
If you want to get the best 18 month CD then you should first look at the rates of different banks and compare them. You should also look at your savings goals. Online banks provide you with rates that are more competitive than brick and mortar banks. This is because they have different overhead costs.
If you want to choose online mode to manage your bank then you should review the online bank customer service options and if you want to manage it in person find a bank that allows you to do so. Another aspect you should look at is the fees that are charged to you.
The banks that have high CD rates do not charge any kind of maintenance fees but they may require a minimum amount of deposit.
Should you choose an 18 month CD?
An 18 month CD is a long term CD because you have to deposit your funds for a minimum period of one year. The APR for this is 4.65% and the six months and nine months CD average rates are 4.89% and 4.91% respectively. It is recommended by most of the experts that the high yield savings accounts are a very good choice to consider.
There are many advantages of an 18 month CD over a savings account. One such advantage is that you can lock in your interest rate. This means that if the interest rates decrease with time you will get the same interest rate that you were getting before.
There is a disadvantage also that if you decide to get your money early before the term is over you will have to pay an additional amount in the form of early withdrawal penalty.
How to open an 18 month CD?
Once you have decided to open your 18 month CD account, then there are several ways to open it. You can either open your account online or in person. To open your account, you have to fill the application which asks you to fill out your basic details such as your name,date of birth, social security number, etc.
After the process of application for opening your 18 months CD account is complete you have to deposit a fixed amount of funds in your account. The amount that you have to deposit varies according to the bank and lies between $100 to $ 1000. You cannot deposit any amount after you have deposited your first fund , so you should deposit all your amount in a single time.
Alternatives to an 18 month CD
High yield savings accounts
If you want to deposit or withdraw your funds any time without any kind of restrictions, then you can choose a high yield savings account as they allow you to deposit and withdraw your funds more flexibly as compared to an 18 months CD.
Short term CDs
Depending upon your requirements, you can also choose a CD which has a shorter term and in this you have to pay a higher amount of installments in a short period of time. A short-term CD which is less than that of a one year will earn less than a full APY.
CD ladders
Another alternative to an 18 month CD is a CD leader. In this, you can add different CD term lengths along with multiple accounts. By doing this, you can spread the amount that you have to deposit across several terms. This also allows you to withdraw your savings earlier before the fixed term as you have spread it across several terms.
Bonds
You can also take the advantage of different types of bonds, such as I bond, if you don’t want your money for several years. The rate of current I bonds is 5.27% but the rates of I bonds are variable that means they vary with time. So when the inflation goes down, there is a chance that your variable rates could become zero.
What is a jumbo CD?
A jumbo CD is the one that has a high deposit requirement and they are less common than the traditional and high yield CDs. The main advantage of CDs is that they offer a guaranteed return because the interest rate is fixed and does not change even if the interest rate falls. But a major disadvantage that people consider about jumbo CDs is that you have to pay a higher amount of initial deposit.
Jumbo CDs vs traditional CDs
Jumbo CDs require a higher amount of minimum deposit, that is, you have to deposit a higher amount of initial investment. But most of the traditional or high yield CDs have no such requirement to deposit a fixed initial amount.
A major advantage of a jumbo CD over a traditional CD is that it offers a better APY as compared to a traditional CD. But now most of the jumbo CD rates are either equal or slightly more than the high yield saving account CD rates. Otherwise, the jumbo CD rates work similar to the high yield CD rates.
Pros of a jumbo CDs
The major advantage of a jumbo CD is that they offer a fixed interest rate.
Another advantage of a jumbo CD is that it offers a much higher interest rate as compared to average savings rate.
The jumbo series that you buy through the banks or the credit unions minimise the risk of losing the original principal.
Cons of a jumbo CDs
If you withdraw your amount before the term is over, then you may lose some amount of interest.
If the interest rate is continuously increasing with time, then the APY is locked due to which you may miss out additional growth.
The CD term restricts you access to your cash before the term is over and if you withdraw early, you will have to pay an early withdrawal penalty.
Things to look for in checking accounts?
APY
You should always look at the annual percentage yield which is the interest amount that you will get on your deposited amount.
Minimum balance
Minimum balance is that amount that you have to pay initially when you open a new account.
ATM fees
If you want to withdraw your money through the ATM, then you have to pay some charges, which are known as the ATM fees.
Foreign transaction fees
Foreign transaction fees is the fee that is charged by the bank when you do transactions outside your country or use a foreign ATM network. Thus, if you travel to other countries very frequently, then you may have to pay high foreign transaction fees.
Welcome bonus
There are some banks which provide you Welcome bonuses when you open a new account. This is generally to attract the customers for opening the accounts in their branches.
Debit card
Most of the checking accounts provide due debit card facility by which you can make electronic purchases and deposit or withdraw money from the ATMs.
Conclusion
In this article, we looked at the various aspects of banking. Firstly, we looked at what is an 18 month CD and the banks which offer the best 18 months CD rates. After this, we came to know about how to get the best 18 month CD rates and why you should choose an 18 month CD.The process of opening an 18 month CD account is also mentioned.
Later, we discussed the various alternatives to an 18 month CD such as high yield savings accounts, CD ladder etc. We also discussed the Jambo CD and compared it with the traditional CD and the pros and cons of the jumbo CD are also discussed in detail. At last, we saw that what are the things that we should look for in a savings account.
