CDs

Question: I am a 33 year old unemployed librarian (laid-off from part-time professional position end of March 2009) full-time doctoral student. I have about $12,000 in a CD that just came due. Rates are terrible of course, I shouldn't need the money anytime soon, and I'm trying to figure out the best, but not too risky, place to put this money, which is most of my savings. I'm leaning towards a 9-month Ally Bank CD with a 1.90% rate. Does it even matter at this point what I do with the money as long as it's safe and secure? I have a separate Roth Ira. Thanks so much. Miriam, Brooklyn, NY

Answer: Ally Bank is the old GMAC bank. The name was changed back in mid-May. I guess the GM name didn't exactly evoke warm feelings of financial security. The online bank is insured by the FDIC. You're right, the key is that your money is safe and secure. My only question is whether you want to keep some of the money easily accessible by parking it in the online savings account. This way you won't have to break the CD contract and absorb a penalty if you need some quick cash.

About the author

Chris Farrell is the economics editor of Marketplace Money.

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