High Interest Rate CD for Investors

Although anyone investing in a certificate of deposit wants a high interest rate CD, for big investors, this is even more critical. After all, a normal person invests anywhere from $1,000 to $5,000 in CDs whereas investors will invest $100,000 to $1 million.  When putting that amount of money in a certificate of deposit, the stakes are much higher so finding the right CDs and those with the best interest rate is critical.[br]

Although anyone investing in a certificate of deposit wants a high interest rate CD, for big investors, this is even more critical. After all, a normal person invests anywhere from $1,000 to $5,000 in CDs whereas investors will invest $100,000 to $1 million.  When putting that amount of money in a certificate of deposit, the stakes are much higher so finding the right CDs and those with the best interest rate is critical.[br]

Typically, big investors will put their money into what are called jumbo certificates of deposit, which are designed to be high interest rate CD options.  It is important to know that with jumbo CDs, not only is a much larger amount of money required as the investment but for the money to provide a nice return on investment, it needs to remain locked into the certificate of deposit for four, five, or six years.

As an example, if someone were to invest in a certificate of deposit paying 3% for six months, they would not enjoy the high interest rate CD returns of investing in a 60-month CD that pays 3.75%.  This is basic math but you would be surprised at how many people do not take the necessary time to research all the possibilities available so they lock into the type of CD that is going to earn them the most money.[br]

By nature, the jumbo CD investment is a high interest rate CD when compared to a regular CD account.  One reason is that the standard certificate of deposit is protected by FDIC insurance.  However, a jumbo CD savings account does not have this same protection, or at least not for long.  As a result, a jumbo certificate of deposit is a riskier choice but, this high interest rate CD could also provide a yield of 2% or greater, which would make a significant difference in potential earning.

For anyone interested in a high interest rate CD, it is also important to know that if the money were not locked in for a long period then interest would have the opportunity to go to work.  In addition, if any of the money were to be taken out of the certificate of deposit account prior to the CD’s maturity date, the amount of interest earned would not be at its full potential.

Therefore, the key to getting a high interest rate CD is to make sure any amount of money invested remains untouched throughout the entire predetermined amount of time.  Otherwise, earning potential goes way down and/or stiff penalties would apply.  In addition, most investors looking for a high interest rate CD will research a variety of banks since banks all offer different types of CDs and pay different interest rates.

Having the ability to compare different terms and rates is one of the key functions to securing a high interest rate CD.  Without spending time to compare options, people lock into what they believe to be a high-paying account only to discover days later that if they had spent time looking at other banks, they could have earned anywhere from 1% to 3% more on the invested money.

Of course, along with looking at banks locally, it pays off to look to see what banks and CD brokers online are paying.  Because there is not as much overhead with online financial institutions, sometimes looking for a high interest rate CD on the internet ends up being the more logical choice.