How to Select a CD Term
People looking to invest in CDs would like to determine how to select a CD term, which would provide good earnings for their money. A CD’s low risk qualities appeal too many wishing to have a safe investment, even as the interest rate may not be as high as stock options.
If a large sum of money is available for investing and a maximum return is desired in a short period of time, look into buying a jumbo CD. These CDs typically have a lower interest rate but a shorter term, some as low as 30 days. If, on the other hand, you have a smaller investment but you time to let it grow, check into a 1-year CD option or greater, to maximize growth.
CDs with 1 year term may offer significantly higher growth than 3 to 6 month alternatives. Also, look at CDs that are available through brokers. But while you generally get the best rates if you go with a broker, not all CDs will be FDIC-insured.
Depending on the difference in yield, you may decide if it is worth taking a chance on an uninsured CD account. The broker also has a fee that reduces your return.
Find out if the CDs you are considering have call features. Some banks can terminate (call) high rate CDs before their maturity dates if interest rates change and they feel it’s in their best interest. While you will get your principal and interest up to that point, it can be a hassle to have to make another investing decision.
Remember that money invested in CDs is subject to early withdrawal penalties. Banks are borrowing your money to invest it for the designated term. They will make you pay the price if you pull it out early. Read the term agreement carefully.
Though some CDs sound like great deals, they may require a large minimum deposit. If you are looking to invest only $500 to $1000, your options will be limited. There are several reliable sites online you can visit for a breakdown of minimum deposit guidelines, CD rates and APYs, and bank providers.
Before you buy a CD, it is best to do some research first. Most savvy investors know how to select a CD term with the best rate for their financial situation.
For additional resources about CDs on this website, please view Sovereign Bank 2% 6 Month CD Rates. For more information from another resource about a financial institution, please view Identity Theft Insurance Providers on our sister site.
We strive to bring you the latest and most accurate data possible from the home sites of the financial institutions we name. Always remember, the bigger the risk, the larger the reward or loss. Invest with caution.
Related posts:
- Jumbo Long-Term CDs
- 5 Tips for Investing in Certificates of Deposits
- What are Brokered CDs?
- US Treasury Bonds
- Best CD Rates 1 Year Term Credit Unions
Tags: bank cd rates, Best CD Rates, CD rate, investing, money, select a CD term
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