CD interest rate US vs abroad, is there a catch?
Part 1 Quite a few [or rather most] countries allow USD account. So there is no conversion.   Just to illustrare; In India its allowed to have a USD account. The funds can be transfered as USD and withdrawn as USD, the interest is in USD. There no conversion at any point in time. Typically the rates for CD on USD account was Central Bank regulated rate of 5%, recently this was deregulated, and some banks offer around 7% interest.   Why is the rate high on USD in India? - There is a trade deficit which means India gets less USD and has to pay More USD to buy stuff [Oil and other essential items]. - The balance is typically borrowed say from IMF or other countries etc. - Allowing Banks to offer high interest rate is one way to attract more USD into the country in short term. [because somepoint in time they may take back the USD out of India] So why isn't everyone jumping and making USD investiments in India? - The Non-Residents who eventually plan to come back have invested in USD in India. - There is a risk of regulation changes, ie if the Central Bank / Country comes up pressure for Forex Reserves, they may make it difficut to take back the USD. IE they may impose charges / taxes or force conversion on such accounts. - The KYC norms make it difficult for Indian Bank to attract US citizens [except Non Resident Indians] - Certain countries would have explicit regulations to prevent Other Nationals from investing in such products as they may lead to volatility [ie all of them suddenly pull out the funds] - There would be no insurance to foreign nationals.   Part 2 The FDIC insurance is not the reason for lower rates. Most countires have similar insurance for Bank deposits for account holdes.   The reason for lower interst rate is all the Goverments [China etc] park the excess funds in US Treasuries because; 1. It is safe 2. It is required for any international purchase 3. It is very liquid.   Now if the US Fed started giving higher interest rates to tresaury bonds say 5%, it essentially paying more to other countries ... so its keeping the interest rates low even at 1% there are enough people [institutions / governemnts] who would keep the money with US Treasury.   So the US Treasury has to make some revenue from the funds kept at it ... it lends at lower interest rates to Bank ... who in turn lend it to borrowers [both corporate and retail].   Now if they can borrow cheaply from Fed, why would they pay more to Individual Retail on CD?, they will pay less; because the lending rates are low as well.   Part 3 Check out the regulations "If you invest in a foreign bank you are subject to their financial rules and regulations. If you put your money with their CD it will be converted to UAH (grivna) and you will be paid back in UAH, which introduces the exchange rate risk.  FDIC is not the only reason why a CD in a US bank pays a lower interest, but it could be seen as a contributing factor.  It all comes down to risk and what the bank is willing to pay for your money, when a bank issues a CD they are entering the debt market and competing against other banks, governments, or anyone looking for money. If the yield from lending to one bank is the same as the yield of another, the logical choice would be whichever loan is less risky. So in order for the riskier bank to receive loans they must entice investors by offering a greater rate of return. In addition, if a bank isn't looking for loans they might be less inclined to pay for them. - See ""What is the “Bernanke Twist” and “Operation Twist”? What exactly does it do?"" If your looking to invest in the CD's of foreign banks I would suggest doing research on their regulations. Especially if and how your money is protected in the event the bank goes bust." I think your approach of looking exclusively at USD deposits is a prudent one. Here are my responses to your questions. 1) It is highly unlikely that a USD deposit abroad be converted to local currency upon withdrawal. The reason for offering a deposit in a particular currency in the first place is that the bank wants to attract funds in this currency. 2) Interest rate is a function of various risks mostly supply and demand, central bank policy, perceived risk etc. In recent years low-interest rate policy as led by U.S., European and Japanese central banks has led particularly low yields in certain countries disregarding their level of risk, which can vary substantially (thus e.g. Eastern Europe has very low yields at the moment in spite of its perceived higher risk). Some countries offer depository insurance.  3) I would focus on banks which are among the largest in the country and boast good corporate governance i.e. their ownership is clean and transparent and they are true to their business purpose. Thus, ownership is key, then come financials. Country depository insurance, low external threat (low war risk) is also important. Most banks require a personal visit in order to open the account, thus I wouldn't split much further than 2-3 banks, assuming these are good quality.
There are many financial reasons why a bank would not want to allow this. While making a note of them does not answer your question, I think it's important to note why traditional CD products do not allow such contributions. Below are two reasons. If a bank wanted to offer such a product they could hypothetically create mechanisms to account for the above And guess what these types of accounts exist ... they are called savings accounts. They allow regular deposits, but often have variable interest rates, charge fees if you don't make regular deposits, or offer interest rates below a typical CD. Note you say you understand what a CD ladder is, but you haven't explained why you don't want to do it. It sounds like what you want is the convenience of a savings account but with the higher interest rate of a CD. Unfortunately, you have to give up a bit of interest if you want this convenience. If you're absolutely certain that you won't buy a house within a year or so, I'd still be tempted to put some of the money into short-term CDs (ie, a max of 12 months). I think that at the moment CDs are a bit of a mug's game though because you'd hardly find one that offers better interest rates than some of the few savings accounts that still offer 1%+ interest. A savings account is probably where I'd put the money unless I could find a really good deal on a CD, but I think you might have to check if they've got withdrawal limits. There are a couple of savings accounts out there that pay at least 1% (yes, I know it's pitiful) so I'd seek out one or two of those. From memory, both Sallie Mae and Amex offer those and I'm sure there are a couple more. It's not great that your money is growing at less than inflation but if you're saving for something like a downpayment on a house I would think that (nominal) capital preservation is probably more important than the potential for a higher return with the associated higher risk. I just graduated from college and I am already planning my retirement.   ... in terms of money sitting in my bank account post retirement, assuming Ii have   $250,000 what is the highest interest that I can earn with it?  Assuming you are 22, and will retire in 45 years at age 67. There is no way to predict interest rates. When I was 22 and just out of college I started putting money into a bank account to save for a down payment. The rate for a savings account was 6%. That means that every month I made 1/2 of one percent. Today that same credit union offers a money maker account with a minimum balance of $100,000 that pays 0.25% for the year. What I made in a month would take two years to make today. Keep in mind we also can't estimate your pay in the last year before retirement, or the inflation rate for the next 45 years, or the mortgage rate, or the availability of Social Security, or the returns of the S&P for 45 years. It is great you are starting to think about this today. But you will have to keep adjusting parts of your plan as the years go by: You may have to factor in children, your medical situation...  Even if the interest rates recover you may not want to put all your post retirement money in the bank. Most people can't sustain the required flow of money for their 30 years of retirement from savings accounts.  As for today. FDIC (or similar accounts from credit unions) will not have rates approaching 3%. It can't even approach that 3% rate via multi-year CDs. My credit union has a 6 year CD for almost 2%. If the goal of the money is safety then don't expect to find those high rates now. Some institutions may offer high rates without that FDIC protection, but that is risky. Money you need in less than 5 years should be saved not invested.  The only place I would be comfortable the money would be a money market account or Certificate of Deposit (CD). I usually go for the money market account because they pay at or close to CD rates and there are no restrictions on getting to the money. However in this case I might choose a CD to keep me from being tempted to borrow some of it for something else. But even after typing that I still think I would put it in a money market, because if interest rates rise they rise in the money market but not the CD, and I just don't think interest can go much lower. I'm going to make an educated guess on #1. Money markets invest in bonds with a very short time to maturity. An MMA at a bank will be invested in government bonds. Yields on these bonds are really low right now. Thus the yield on that MMA is going to be pretty low. When you make a deposit in a savings account, the bank uses some of that money to lend back out to its customers in the form of car loans, mortgages, etc. These rates are higher, so the bank is willing to pay you a bit more than the yield MMA so they can use your money for these loans. For #2, your time window is short, so there aren't really a lot of options for you. Keeping your money where it is will actually cost you money in fees. You can do as I suggested in my comment above: close the current savings account that's hitting you with fees and open a (free) high yield savings account. You might get 1.1%. If you average $60k in the account over the next 6 months you'll earn $200-250 after taxes. You didn't ask about CDs, but lately shorter term CDs are paying less than savings accounts. Going out to a year will get you just above the rate on a high yield savings account; two years just a little more. These are outside your goal window, so they aren't an option for you. Consider also setting up a CD ladder. CD rates are often better than savings account rates. You have a 12-month CD that you purchase in January with a twelfth of your money, then another small one in February, then another in March.... then, when January comes around again, you a little more money to the first CD, and the ladder is complete. The idea is that you have more access to your money than one big CD, since you'll always have a CD maturing next month that you can get to in case of an emergency, and you can get better rates on a 1-year CD than on something else (with less risk of being locked into a bad interest rate). And you'll be less tempted to tap it all at once to buy some fancy car or what-not because you can't get at it all at once (without a penalty). And in a major emergency, losing a few percent of your interest for early withdrawals is likely the least of your problems. "In the US, usury is complicated and depends on the type of account, the bank charter and the where the bank makes credit decisions. Most major US credit cards are issued by entities in Utah, South Dakota and Delaware. None of these states have usury limits. Many states have usury limits. In New York, for example a loan may not exceed 16% interest, if the institution is supervised by the State.  Credit card issuers are usually chartered as ""National Associations"" (ie Federally chartered banks regulated by the Comptroller of the Currency). There is no Federal usury statute, and Federally chartered banks are allowed to ""export"" many of the regulations of the state where credit decisions are made. Small states like South Dakota basically design their banking regulations to meet the needs of the banks, which are major employers." Realistically, it is CDs with longer terms or are callable.  You pretty much have to accept more risk if you want higher returns. If you are willing to accept that risk by losing the FDIC protections the next level up is probably high rated Government bonds.