Certificate of Deposit Interest Rates
Please note that we are not authorised to provide any investment advice. The content on this page is for information purposes only.
Every time your Certificate of Deposit (CD) matures, be sure to look for issuers that offer competitive certificate of deposit interest rates. Instead of sticking to your previous issuer, explore other better opportunities. Obtaining better CD interest rates ensures that your maturity amount and the final income received from the investment are also higher. Certificates of deposit offer consistent return on investments and are insured by the US Federal Deposit Insurance Corporation (FDIC) for $250,000.[br]
Certificate Of Deposit Interest Rates – Things to Consider
Although finding the best certificate of deposit interest rates is a must, it should not be the only criteria while looking to invest in CDs. Here are some important factors to consider:
High Interest Rates: Usually, small banks offer higher interest rates than big banks. If you are not risk averse, you can opt for a bank that is not insured by the FDIC. These banks normally pass on the cost savings associated with the insurance to customers through higher interest payments. A personal CD, rather than a business CD, tends to offer higher interest rates.
Tenure and the Amount Invested: Certificate of deposit interest rates may vary depending on the amount and tenure of investment. In most cases, $500 is the minimum amount. The issuer decides the rate of interest and the maximum amount you can invest. Most banks offer higher interest rates if the investment period is longer.
Early Withdrawal Fees: Most banks impose an early withdrawal fee for withdrawing the invested money prematurely. Investors may have the option to withdraw the interest income periodically. Periodical withdrawal may, however, lead to decreased returns.[br]
Bump-Up CDs: Most CDs come with fixed rates, while some of them come with variable interest rates. There are some no-penalty CDs as well, which let you switch to higher interest rate CDs without any penalty. This is also called bump-up CD. Such switching can be done only once.
Investors must research well before trusting their money with a particular issuer. They must compare several offers to get the best certificate of deposit interest rates. Also, using financial calculators to compare interest rates can yield quick and precise results.
