How Do I Choose the Best Certificate of Deposit

It can be overwhelming when you’re trying to find out the ideal option for you when it comes to saving your money.

If you have a long-term goal, you know the importance of saving your money the best way possible that will yield the best result when you’re ready to use it. There are several options available for you; one of them is the certificate of deposit.

Breaking it Down

You’ve probably heard a lot about CD and have wondered just what it means; we’re here to break it down for you. A certificate of deposit is a kind of secure investment option for you to explore; these returns on this account can be predicted, and there is a guarantee that by the time it matures, you’ll get your return.

One of the significant parts about this account is that this one comes with a more substantial interest percentage than other savings account options.

This account appeals to people who want to build up their savings with little or no risks attached.

Like other savings account, there is nothing to fear with this account because it is secured by the FDIC when you choose to open with a bank. Unlike a different savings account, your rates when you open a CD are fixed and locked in.

Merits of Getting a CD

A CD account might be the game-changer you’ve been looking for for your finances; it could perform wonders for your saving plans.

If you’re interested in getting a CD and need a little push, below are some of the merits you enjoy with a CD.

Stress-Free CD Shopping

Sometimes opening an account can be so stressful, and you’re required to pass through many steps before you can successfully open one. This is not the case with a CD as it is available not only with banks but also credit unions. Once you have the funds to start, you can easily open one. You can even open a CD online and fund the account through your checking account; this requires less effort than going to a bank.

It’s a Safe Option

If you’re reluctant about investing due to the market’s high risks and volatility, you will find CD a much safer option for you. With this account, your fears are dispelled because the law protects your money.

All you have to do is confirm with the institution that they are insured with FDIC, and if they are, you can sleep much better at night. Another reason you can trust your money in a CD is that it differs from other investments in terms of predictability; your money’s growth is predicted with a CD.

Increased Interest Percentage

If you’re looking for amazing deals on interest, you will get them with CDs. The percentage of interest is always higher when you open a CD account, unlike other savings account; this ensures more money for you on deposits. If you’re looking for better options than a typical savings account, you would be making the right choice with a CD.

Rates Are Fixed

There are not many things we are sure of when it comes to money, but with CD, the rates are pretty straightforward and are not decreasing or increasing with the market. Other savings account are victims of unstable market rates; this is not the case with CDs.

With a certificate of deposit, the percentage of your interest is fixed, mostly when you agree to leave your money untouched with the financial institution for some time so your money can mature.

Variety of Terms

We know how unsure you can be when it comes to leaving your money with a bank or other financial institutions for a long time; that’s why you’re provided with options.

There are different periods you can choose from like days, months, or years; it is totally up to you how you want to go about it, and you can even choose to have double CDs.

Choosing the Best CD for You

Now that you have decided on opening a CD, there are some factors you can employ in making the best choice for you. Check out these tips to determine what the best certificate of deposit is for you

Reflect on the Terms

Before picking a CD, check out the terms of the CD account. Money stored in a CD account isn’t meant to be withdrawn quickly as that might attract a fee. When you lock your money in, you’ll begin to earn profits till you decide to withdraw. It would be best if you decided how long you’re willing to invest your funds without access to it.

Check out The Rates

Before choosing the ideal CD, don’t be scared to shop for the best rate available. The whole idea is to earn interest, and that can only be done when you go for the best quality offered by the different banks.

Find out the latest rates before signing up for any CD, compare rates from banks, and then make your decision based on which offers you a better deal.

Feel Free To Explore The Different Products Available

The typical CD has a fixed rate, which you get to enjoy based on your chosen term; however, other kinds are available to you with different rates. Most of these CDs even allows you access to your funds before the set maturity date; some CDs allow your interest percentage to rise if there is a rise in the market rates. Some CDs are gotten through a brokerage firm, and these kinds of CDs offer you much better rates.

Check out The Deposit Requirements

Each CD product has its deposit requirements, find out the minimum amount attached to the different types before choosing the best option for you. Some banks offer increased rates, but the least deposit is usually high.

Consider Withdrawal Charges

There are charges attached to withdrawing funds from your account before it is matured; the bank varies. It would be beneficial if your chosen institution offers a lower penalty than others; this comes in handy if the rates go up and you would like to invest all over again. Find out the withdrawal charge and compare it with interest you might receive to decide the best decision.

Consider Laddering

CD laddering usually entails having two or more CDs and also different dates for maturity.

This helps you have access to some of your cash, and you can also gain when the rates increase because you have funds left to invest once again. With Laddering, you can even have a CD maturing with every passing year.

Sandra Royal

By Sandra Royal

Sandra Royal is a financial analyst, writer and editor.

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