It’s that time of month again, and again we’re backing off of signing up for another 6 month CD term because rates just don’t seem worth it to us.  Instead we’re keeping this month’s EF (really income replacement) money in a savings account.

As a reminder, my wife and I have saved up 6 months of living expenses in cash as our Emergency Fund.  We’re working on adding to that to get it to 9 months, but that’s a different post.  We plan to use this money only in the event of catastrophic income failure, or equally disastarous expense failures such as a severe medical emergency.  Because of this plan of access, we’ve chosen to break up the investment of these funds into monthly chunks, i.e. a 6-month ladder, where each chunk can be locked into an investment for no more than 6 months.  Typically those investments are 6-month Certificate of Deposit.

However, for the past two months and now going on to a third, we’ve opted to prefer the slightly lower return, and rate fluctuation risk, of keeping the monthly chunks in a high-yield savings account.  The main reason being that the liquidity concerns have trumped the small differences in APY between a 6-month CD and a savings account.

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For this month, my survey of CD rates showed two interesting things.  But first, a quick summary of the rates I found (as of today’s date):

• ATFCU: 1.86% APY
• FNBO Direct: 1.00% APY
• Ally Bank’s classic CD: 1.90% APY (the highest no-minimum rate listed on Bankrate.com’s 6-month CD rate suvery.)

First, I found that my local credit union has actually INCREASED their 6-month CD APY for the first time since we started monitoring rates.  It is up to a 1.86% APY from a 1.78% APY.  Not a huge raise, but at least things are moving in the right direction.

Second, it showed that APYs from savings accounts are still very competitive.  In fact, a quick check of high-yield savings rates on Bankrate.com shows a number of options currently paying a 2.0% APY, or higher.   Yes, these rates can fluctuate versus the locked-in rate of a CD, but you also have higher liquidity for these so it comes out a wash to us.

In short, we decided to not roll-over our 6-month CD yet again this month.