Savings Accounts

What is a CD (Certificate of Deposit)? A CD, certificate of deposit,  is a time locked savings deposit made by the purchaser and held by a bank in return for interest rate. Unlike a regular savings account, with a CD, you commit to depositing your money for a certain term (a certain period of time). Throughout that term (period of time) you earn a predetermined interest rate, paid out at predetermined intervals. However, cashing out your CD account early (before the maturity date comes / before the term ends) will usually trigger an early withdrawal [...]

Why should you consider buying CDs? CDs, certificates of deposit,  are an important  part of many well rounded investment portfolios. These deposits offer the safety of a savings account with the high interest rates of investments. Because you can count on a fixed interest rate for a set period of time as long as you hold the CD until maturity and not cash it out, CDs are a great product for a safe money preservation and income generation. But a CD isn’t only appropriate for your nest egg. A CD is also a natural place [...]

Why are CD rates usually higher than savings account interest rates? When you deposit your money in a CD, you let the bank have full and guaranteed access to your money for the full term of your commitment, be it one week, two months, six months, one year, 18 months or even five years or more. Since the bank is able to plan around your time commitment and use your CD deposits in its own higher earning stock market investments, CDs offer better interest rates than savings accounts, on average. In other words – the bank [...]

What CD term should I choose? Choosing a CD term is a balancing act. On the one hand, banks often offer higher CD rates to customers for longer CD terms. On the other hand, the longer the CD term, the higher the likelihood that you may need to tap the money in your CD before it matures. There’s also interest rate risk: if prevailing interest rates rise while you have a large lump sum locked into a multiyear CD at a fixed rate, you could lose out on the rise. If you’re buying a single [...]

With any deposit account, it’s important to find better interest rates by comparing bank offers. But when you’re choosing a CD, it’s even more likely that the interest rate offered will make or break your decision Why? When opening a CD, it matters less what the bank’s ATM network, transaction fee schedule or online banking portal look like. Those factors are critical when selecting a savings account or checking account, but they’re less likely to be differentiating factors for a CD. By definition, this is money that you aren’t using for frequent transactions.Interest rates on [...]