12.03.07
High CD rates
When you invest in a Certificate of Deposit (CD), you generally want a higher rate of interest to earn the highest amount of money possible. Typically, the longer the CD time is (the term), the higher the interest rate. For instance, a 6-month term for a CD could be 3% but a 5-year CD could be 5.15% interest.
This is also true for deposit amounts; the higher amount you deposit in the CD, such as $25,000, the higher your interest rate will be. This is because you are allowing the bank to borrow your money for that amount of time, and higher amounts and longer time periods are rewarded by being given more interest.
Most CDs are FDIC insured by banks, unless you invest in a Jumbo CD account or use a credit union CD. Jumbo accounts are typically more than $100,000 thus they are not insured by the FDIC; however, they offer higher interest rates than regular CDs and are safer than other investments like money market funds or stocks.
Whatever type of CD you open, you should be aware of the penalty fees that the CD has for early withdrawal. The set term you have for the loan is the time period you are agreeing to the bank or organization to use the money, thus if you take out the money early you will be penalized with a fee.
Research your CD rates on the internet to look for the best rates. You can also use a CD calculator to determine how much interest you will earn on your CD. Don’t stay with the same bank or organization too long or you may miss out on the highest CD rate available, although it is smart to continually re-invest your CD money to keep increasing your money. Generally, online banks have higher interest rates because they don’t have building costs and other fees that land institutions have. Do your research and you will benefit from getting the highest CD rate.