As you probably know, you will be charged penalties if you withdraw from a CD account before its maturity. The penalties are usually low, but it’s still preferable to avoid this situation. Therefore, think carefully about when you are likely to need the cash.
If you can afford to freeze your money for a long time, however, you shouldn’t always choose the corresponding long-term CD. In the case of ING Direct, the highest rate, 2%, is offered on a 12-month CD, so there’s little benefit in choosing 18-month or longer terms. After 12 months, you will need to reinvest your money, but at that time you should be able to find good rates either with ING Direct or with another bank.
The interest can be paid at the end of the term, monthly, or annually. It’s probably better to settle for the “end of the term” option, since taking care of small payments is troublesome, and you’re likely to forget it and leave it in the checking account without any interest.
Finally, ING Direct offers really low rates on 6- and 9-month Certificates of Deposit. The rates, 1.25%, are lower than their own savings rates. There’s no reason to choose those terms; savings account gives more flexibility and more interest.
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