What is the purpose of a short term CD that offers lower interest than a savings account?
I have noticed that some banks offer short term CDs with interest rates that are actually lower than that that the same bank pays on a savings account.
For example Ally bank seems to offer a 0.30% APY for a 3 month CD (up to 0.39% if you deposit ,000 or more) while their online savings account is offering a 1.05% APY.
What reasons would there be for purchasing such a CD instead of simply parking the money in a savings account?
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Very little, as you expected.
The CD locks the rate in, meaning you get the rate for sure. The savings account can change any day, so it could fall below the CD's rate.
Chances are small, obviously, but it is theoretically possible. If you pay attention, if this happens, you could simply moving it to a CD then (if it is still offered).
People with little understanding that want 'security' might be suckered into buying a CD; or there could be versions offered where all the interest comes on the last day (so you delay taxes).
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