Q: I have $100,000 that I am going to be using for a down payment on a house, but I won’t need the cash for 3 to 9 months.
Should I put the money in a 3-month CD and continue to roll it over until I need it or should I choose a longer-term CD. Which one will pay the most interest?
A: Since you’re not sure when you’ll need the cash, I’d put it into the 3-month CD and roll it over until you need it. The difference in interest between a 3-month and 6-month CD isn’t much, and this way, your cash will be accessible.
The other option is to find an online bank account that is paying almost as much as a CD. At INGdirect.com, an Orange savings account was paying 4.5 percent at press time, and your cash would be fully available to you. Some mutual fund companies’ cash accounts are paying even higher amounts, although that amount fluctuates from week to week.
You can search for savings account information at BankRate.com.