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Contributor

I have a large amount of money in my USAA savings account. I don't need this money now but I do not want to do anything risky with it. Is there a low or no risk place I can park these funds that earn a better interest rate than a basic saving account?

4 REPLIES

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Hi Framon,

Congratulations on building up your savings! I encourage you to give one of our advisers a call at 800-771-9960 to talk about your options more in depth or you could send us a message here with additional details that will help us recommend the best option for your situation (age, goals, amount you a re looking to put away etc)! We look forward to hearing from you!

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CDs are pretty much no risk. The only thing is that if you withdraw early, you can lose all or some of the interest you earn, but you won't get penalized below what you put in. In most cases, you lose the last year of interest. So if you open a 5-yr CD and end up needing the money after three years, you only get to keep two years of interest.

 

CD rates are really low right now, though, and not likely to go back anytime soon. The best you're going to find is 1.3% or so.

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CDs are very safe as long as the institution you choose is FDIC insured as most banks are.   Credit unions also have deposit insurance.   Shop around for a well rated bank on bankrate.com or a similar site.  Unfortunately, USAA is not competitive with other online banks.  You can find up to double USAA's rates if you shop around.  And do check with your Credit union

 

PenFed credit union is military also and does have more competitive rates, though unless you catch them during a special offer, they are not as good as other online banks. 

 

Also, when shopping for CDs check the early withdrawal penalties.  If you commit to a low rate and then rates go up, this can be important.  USAA does not seem to post their policy, or I just can't find them.