Best CD Rates (Certificates of Deposit)
Certificates of deposits, abbreviated CD and financial accounts offered by banks and other financial institutions, are deposit accounts that are insured by the Federal Deposit Insurance Corporation (FDIC). CDs are like savings accounts, but they carry with them a fixed term (length of time) and typically a fixed interest rate as well. CDs usually offer better interest rates, but the deposit made into a CD is meant to be kept in that CD until the term matures. CD accounts have different terms depending on the bank or credit union that makes the offer, but they generally run between one month and five years, with the longer terms offering higher interest rates.
Use the table below to compare the different certificate of deposits to find the best CD rates for your needs.
Those who are looking for a safe place to put their money may want to look at a CD as a worthwhile investment vehicle. A CD will offer a higher interest rate than a savings account, and you are practically guaranteed to get your money back when the CD term expires. If you are considering a certificate of deposit, what should you know about them before your money is tied up in them?
Who Offers a Certificate of Deposit?
Most banks and credit unions will offer CDs to anyone who can meet the minimum investment threshold. It is typical for a financial institution to ask for $50 or $100 to fund a CD. Check out the table above to see some of the best CD rates currently available. This means that young kids can use this to help their money grow or parents can use a CD to save money for themselves or their children. Grandparents could also use such an instrument to help a grandchild save for college. If a child does want to save money with this tool, a parent or guardian will need to be a custodian to such an account until that child turns 18. As the account custodian, you have sole discretion as to what happens to that account until the child reaches age 18.
How Much Interest Can a CD Accrue?
The interest rate on your CD depends on several different factors. Those who have a CD balance of more than $1,000 tend to get higher rates than those who have less than $1,000. The difference between the interest rate banks offer on a low balance CD and a high balance CD is anywhere from .5 percent to more than 2 percent. Another issue to consider is how long you plan on keeping your money in the CD. If you have your money in a CD for less than a year, the amount of interest that it will accrue could be less than 1 percent. If you keep your money in the CD for more than a year, you could see rates of 1.5 percent or higher.
Can I Take My Money Out?
Most financial institutions will charge a fee if you take your money out before the CD fully matures. However, there are some lenders that allow you to take your money out if you want to then roll it into a new CD that offers a higher interest rate. Otherwise, you are generally required to keep your money in the account until it reaches maturity.
Using CD Ladders to Increase Your Return
A CD ladder is a strategy that some investors use to increase the value of their overall portfolio. The goal is to buy a mixture of short-term and long-term CDs at a variety of interest rates with the hopes that their money remains as liquid as possible while increasing their returns. While the CD ladder can be tricky to learn at first, it is a tactic that anyone can use regardless of how much money that they have. When it comes to saving or investing your money, you want maximum return while exposing your cash to minimum risk. For those who are looking for capital preservation, a CD can be the perfect way to earn interest on your money without running the risk that you may lose your money while it is in the CD.