5 Year CD Rates, Longer Term, Higher Rate

If you want to invest money in a certificate of deposit, the way you will earn the most money in return is by choosing the longest term until maturity.  Some CDs are locked for only six months to a year but if you can afford it, we strongly recommend five, even six years.  For one thing, five year CD rates are by nature going to be higher than rates you would earn on a shorter term.  In addition, most banks that offer the longer terms for certificates of deposit require a larger deposit.[br]

If you want to invest money in a certificate of deposit, the way you will earn the most money in return is by choosing the longest term until maturity.  Some CDs are locked for only six months to a year but if you can afford it, we strongly recommend five, even six years.  For one thing, five year CD rates are by nature going to be higher than rates you would earn on a shorter term.  In addition, most banks that offer the longer terms for certificates of deposit require a larger deposit.[br]

Although not everyone is in a position to enjoy five-year CD rates, especially with the tough economy, some are.  Therefore, if you can comfortable invest $10,000 and more, knowing that you can leave your money alone throughout the entire term; you will ultimately see a nice return on that investment.  Of course, it would be important to find a bank that offers the best five-year CD rates possible but also one that compounds the Annual Percentage Yield (APY) monthly instead of quarterly.

For five-year CD rates, or any rates for that matter, interest is determined using a specific formula.  The two primary factors that need to be considered for this type of investment includes the amount of time the money is locked in until the CD matures and the interest rate currently being offered.  Again, the longer you can keep your investment locked without taking an early withdrawal the higher the interest rate would be.[br]

Since every bank is unique, it would be to your benefit to shop around.  While interest rates may not be the best right now, as the financial market settles down experts believe that five year CD rates will improve and when they do, the potential for earning increases.  Keep in mind that one reason banks pay more interest for a five-year certificate of deposit than they would pay for a six-month CD is that the extra time allows them to use the money in more ways and for more purposes.  Therefore, a long-term CD investment is beneficial to you but also the issuer.

When searching for the right CD and the best five-year CD rates, you also need to have a clear vision of your ultimate earning goal.  Typically, people that invest for longer amounts of time are investing higher amounts of money.  This means the investment is being taken a little more seriously.  Therefore, if you are trying to find a bank that offers high five year CD rates chances are you are looking to make some serious money long-term.

In addition to spending time looking at different banks to see the five-year CD rates being offered, you might also look to see what credit unions are offering.  Sometimes, interest is higher with a credit union but because this is not a government entity, your money would not have FDIC insurance protection.  Therefore, if the credit union were to fail, you would lose everything.  Now, if you want to consider a shorter term certificate of deposit, then a credit union would be a great option but for longer investments, especially those of higher amounts, we still believe looking for high five year CD rates would be the better choice.