Wednesday, October 1, 2008

Testing out

Money Aisle is a web site that tries to match you to a good rate on certificates of deposit at participating banks. The concept is great, you tell them the amount of money and the term of the CD and 70 or 80 banks bid for the rate. The upside is you don't have to accept the winning bid, so trying it out doesn't cost you anything or commit you to anything. If you accept the bid, you open the account directly with the winning bank (all are FDIC insured)

I actually want to open a CD so I was interested in finding out if I could get a better rate there than anywhere else. I compared the results here with what I found on and (a single bank, but one with high rates). I ran several auctions, to find the impact of term and amount invested on the resulting rates.

First, $10,000 for 1 year (all of eloan's cd's have a minimum amount of 10,000). After a minute of bidding, the winner on MoneyAisle was... eloan, the site I had independently identified, and, the rate was exactly the same, so I gained nothing by using moneyaisle for that one.

Second, I ran an auction for a cd of $4,000 for a 3 month term, the winning offer was about 3.26%. I went to the winning bank's website and the rate they offered was 3.25%, so there was a very slight gain by going through moneyaisle. I re-ran the auction for $5,000 to see if more banks participated, but got the same winning bank, this time with a slightly better rate of 3.28% I liked this, I really was getting a higher rate from the bank by running an auction!

I then looked on and it turned out that there are half a dozen banks offering rates higher than that and I don't have to go through an auction.

In the end, the auction didn't get me the highest rate available, and didn't even get me a much higher rate from participating banks. The idea has promise, but if you try it, make sure you also look at to verify that you are getting the best rate. Until they can beat the best rate at bankrate, they are not the best choice for finding CDs.

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