CD Intrest
While it is true that certificates of deposit (CD's) aren't
going to make your rich, it can be a safe haven for your
money. There are many things that go into the amount of cd
interest you will earn. In this article I will discuss some of
those factors so you know what to look for.
In order for you to decide if a cd is your best option and to
find the best cd interest rates you can, you need to know some
basic information.
Here is a list of some of the factors you should take into
consideration before you open your cd. This information will
also help you find the best financial institution to work
with:
1. What are you saving for? If you have a specific time frame
in mind you will want to carefully consider the term of any cd
you decide to open.
Cd terms can vary from 6 months up to over 5 years. Generally,
the longer the term the higher the yield. But that won't do
you any good if you are trying to save for that special
getaway for your anniversary and that date will arrive before
your cd matures.
In that situation you would lose most or all of your
interest if you were to close your cd prematurely.
Don't get so focused on the rate of interest that you overlook
other, equally important, issues.
2. Who offers the best interest rate? To find out you may
want to visit the websites of your local banks and credit
unions. You can also find many competing financial
institutions on one site: bankrate.com.
Of course, you have to remember that interest rate is just one
of many factors to take into consideration to ensure you get
the best possible product for your needs.
3. How much does each bank require in order to open a cd and
is that amount in your budget? Typically the higher the amount
you are depositing and the longer the term will determine the
rate of interest you will earn.
So while you want to earn as much as possible, you may have to
settle for a little less if the higher interest rate also
comes with a higher deposit amount or a longer term and those
things don't work for you.
Before you open a cd make sure you have a complete understanding of all aspects of the cd. Focusing exclusively on the interest rate is a sure way to make a big mistake.
If you know that you are saving for the long term, than the term of the cd does not really matter that much. But if you know you will want access to that money sooner for some project or special occasion, you need to be willing to settle for a little lower interest rate.
It really isn't all that difficult to find a good cd interest rate as long as you are willing to invest a little bit of forethought and time.
