How to Find the Best CD (Certificate of Deposit) Rates
Getting high rates for your Certificate of Deposit (CD) is important. There are several options available that can help you get the best rates you can.
Shop around. Don't just look at your local bank's CD rates. Only sticking with your local bank can prevent you from taking advantage of the CD rates offered by other banks. Go online, call, or visit other banks and compare the rates and terms. Your local bank may offer lower rates than a larger bank (or the other way around).
Compare rates and terms. The CD rate is the percentage of interest you will earn. A term is the time period length of the investment. Maybe your bank has lower CD rates, but will let you invest for 6 months, where as another bank has higher rates, but you must invest for at least a year. It is important to find the right length of time for your investment so you don't end up needing to pull your money out of the CD early.
Check online banks. Some online banks offer higher rates, because they don't have the same costs that a brick and mortar bank may have. It is important to make sure that they are FDIC insured, and if they are, than they are just as safe as any other bank.
These are some of the considerations you should take into account when looking to get the best rates available for CDs.
Shop around. Don't just look at your local bank's CD rates. Only sticking with your local bank can prevent you from taking advantage of the CD rates offered by other banks. Go online, call, or visit other banks and compare the rates and terms. Your local bank may offer lower rates than a larger bank (or the other way around).
Compare rates and terms. The CD rate is the percentage of interest you will earn. A term is the time period length of the investment. Maybe your bank has lower CD rates, but will let you invest for 6 months, where as another bank has higher rates, but you must invest for at least a year. It is important to find the right length of time for your investment so you don't end up needing to pull your money out of the CD early.
Check online banks. Some online banks offer higher rates, because they don't have the same costs that a brick and mortar bank may have. It is important to make sure that they are FDIC insured, and if they are, than they are just as safe as any other bank.
These are some of the considerations you should take into account when looking to get the best rates available for CDs.
What is a CD (Certificate of Deposit)?
See why a Certificate of Depost (CD) can get you a Higher Interest Rate.
Most checking and savings accounts provide very little interest, or even no interest at all. This means your money is just sitting in an account and not working for you. A good way to have your money work for you is by investing a portion of your money in certificates of deposit (CDs). CDs will allow you to set a chunk of money aside for a certain period of time (usually at least 6 months) and receive a higher interest rate than you would receive with a checking or savings account.
Certificates of deposit (CD) work by the consumer "lending" money to the bank for a fixed period of time at a fixed or variable interest rate. Banks generally offer several different rates and time periods. As the "lending period" increases, the interest rate you will receive also increases. In addition, many times, the larger the principle investment, the higher the interest rate you receive. Some banks require a minimum deposit for certain CDs. The interest you make on the investment can be reinvested into the CD or can be distributed to you in a check at specific time intervals (monthly, quarterly, etc.).
For example, if you take $1000 and purchase a 6-month CD at a 3% interest rate that is reinvested into that CD every quarter. After the 6 months, the CD is said to have ?matured? and you can collect your principle and your interest. If you do not collect your money by a certain time, the bank may automatically put your money into another CD at whatever the current interest rate is.
CDs are virtually risk-free and are insured by the FDIC or the NCUA. They are also fairly liquid as you are able to convert your CD to cash even before the CD matures, although there may be a substantial monetary penalty for doing so. Learn more about CD's at www.ratenerd.com.
Certificates of deposit (CD) work by the consumer "lending" money to the bank for a fixed period of time at a fixed or variable interest rate. Banks generally offer several different rates and time periods. As the "lending period" increases, the interest rate you will receive also increases. In addition, many times, the larger the principle investment, the higher the interest rate you receive. Some banks require a minimum deposit for certain CDs. The interest you make on the investment can be reinvested into the CD or can be distributed to you in a check at specific time intervals (monthly, quarterly, etc.).
For example, if you take $1000 and purchase a 6-month CD at a 3% interest rate that is reinvested into that CD every quarter. After the 6 months, the CD is said to have ?matured? and you can collect your principle and your interest. If you do not collect your money by a certain time, the bank may automatically put your money into another CD at whatever the current interest rate is.
CDs are virtually risk-free and are insured by the FDIC or the NCUA. They are also fairly liquid as you are able to convert your CD to cash even before the CD matures, although there may be a substantial monetary penalty for doing so. Learn more about CD's at www.ratenerd.com.
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- runnergoat runnergoat Oct 1, 2009 @ 9:40 am
- Good review. Check out this cd rates page for more info.
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