How do you get the best rates for certificates of deposits, which are more commonly referred to as CDâ€™s? Before we can explain where you can get the best rates, here is an explanation on what a certificate of deposit is. CD’s can best be explained as a cross between an investment and a personal savings account. All Certificate of Deposits have (FDIC) Federal Deposit Insurance of up to $100,000. The Federal Deposit Insurance is what sets certificate of deposits apart from investments such as stocks. The advantage of CD’s over a traditional savings account is that the rates for cds in terms of interest are always higher. It’s recommended and obviously in your best interest that you explore and find out where you can get the best rates for certificate of deposits.
Finding the best rates for certificates of deposits, that gives you the highest rate of return for the amount you want to invest, depends on your flexibility and goals. First understand that there are certificate of deposits that you can purchase for as short as a year. Most banks will also offer five year terms up to as high as twenty year cds to suit your needs. The longer you keep your money in a CD, the higher the rate of interest will be. So it’s advantageous to purchase the best rates for certificate of deposits as well as for the longest term possible. When your cd expires, you can either renew it or you can decide to cash out the certificate of deposit. Not only will you get back the original deposit that you invested, you will also receive the interest that the money has accrued.
While certificate of deposits are a great way to save money and safely earn high rates of interest, certificates of deposits are not necessarily the best choice if you want to prematurely withdraw money before the investment period of the cds has matured. Although you are allowed to withdraw the money, you will either have to give up some of the earned interest or pay an early withdrawal penalty. So financially, itâ€™s always better to get the best rate for certificate of deposits and leave the money invested until maturity. But as a last resort, keep in mind that you can withdraw the money if an unexpected emergency occurs or you absolutely need the money.
When searching for the best rates for certificates of deposits, be aware of the variety of interest earning options available. They all offer various rates of return. Some of the most popular options available are: fixed rate interest, long-term CDâ€™s, variable rate CDs… If youâ€™re not sure what type of CD interest option is the best fit for your situation, ask!
Understanding Certificate of Deposits
Before you put your money into a CD, or when you are looking for the best rates for certificates of deposits, itâ€™s important that you understand some of the common terminology associated with Cds:
Penalties: You have to remember there are penalties for early withdrawal. Even if you open a CD account and you have no plans of withdrawing the money before your investment period expires, you should understand the penalties in case some unforeseen circumstances arise that require you to access the money youâ€™ve put into the CD.
Interest: Always know whether or not the interest rate of the CD’s are fixed or variable, as well as how often the interest is paid. Getting the best rate for CDs insures higher interest when it matures.
Maturity: Every certificate of deposit has a maturity date, Get the best rates for the certificate of deposits. The longer the term, the higher the interest, whether your CD matures in 1, 5 or 20 years.
Call Features: Banks will often put a â€œcall featureâ€ on the certificate of deposits they issue. A “Callable CD” means that the issuing bank can terminate the cd and return the amount you invested plus any unpaid accrued interest if the interest rates fall.
CD Holdings: There’s a distinct difference between a bank CD and a brokered CD. If you decide to use brokered certificates, it is possible that there are a group of investors that actually own small portions of your CD. Banks are often safer. Regardless of the type of CD that you choose, be sure that they have FDIC coverage.
The Bank Of Internet can offer the best rates for certificate of deposits, they are a member of the FDIC and offer the following benefits:
* $1000 minimum to open
* No fees
* Compounded Daily
* Paid Monthly, Into Account, By Check or Wired to Your Checking Account
* Certificate accounts can be opened up to a maximum of $100,000
* Offers one of the best rates for certificates of deposits