Interest Rates CD
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Interest Rates CD – Points to Consider
A Certificate of Deposit (CD) is a fixed income instrument. Investing in CDs is one of the safest and reliable ways to earn stable income. CD interest rates are lower when compared to other investment vehicles such as stocks, Forex and commodities. Individuals and institutional investors can invest in CDs to diversify their assets. Unlike a savings account, a CD is not a very liquid asset and one need to pay penalties if the money is withdrawn before maturity.[br]
Interest Rates CD – Points to Consider
The CD interest rates offered by various financial institutions differ. They set interest rates according to the Annual Percentage Rate (APR) and these can be fixed or variable rates. Usually the interest income is added to the principal. An investor can not withdraw the principal amount before maturity. However, some banks allow investors to withdraw the interest income periodically. If one has to withdraw, there will be penalties. Some financial institutions offer the option of withdrawing the principal amount without any penalties. Before investing in CDs, one should check with the bank about the terms related to pre-matured withdrawals. Among financial institutions, credit unions offer better-than-average rates to investors.[br]
Interest Rates CD – Safety
One of the major advantages of investing in a CD is the fact that it is insured by the Federal Deposit Insurance Corporation (FDIC) for up to $250,000. If your investments are below this limit, you need not worry. If your investments are higher than this limit, you should consult the bank regarding insuring the rest of the money. Given the fixed interest rate and the insurance by the FDIC, CD investments are considered to be one of the safest investments.
Before investing in a CD, one should check the terms out with banks or credit unions. Some banks require investors to open a new savings or checking accounts with them which have a high minimum deposit. These minimum deposits normally attract very low interest rates. One can find financial calculators online that can produce a comparison chart which can help can find the best interest rates and make your decision accordingly.
