CD Rates
By Deliyami Yeo
CD Rates
If you want an investment that maintains your principal, Certificates of Deposit (CDs) are a great way to go. The best feature of a certificate of deposit is lack of market risk because the rate is guaranteed for the life of the deposit and you don’t have to lose sleep over night thinking you’re going to lose 50% over a few months.
Certificates of deposits (CD) are short to medium-term debt instruments issued generally by commercial banks and other financial institutions to investors. Investors will lend money to the institutions for a certain amount of time in which investors cannot withdraw the amount. In exchange, the banks will pay a predetermined rate of interest to the investors called Certificate Of Deposit Rate (CD Rate).
buying a CD during the times when interest rates are at their highest can give an investor higher returns. Given this, investors who’re planning to cash in on CD?s would do well to research on the history and the trends of CD rates, as this can help them plan on when would be the best time to get in on the action
Doing the research
With the Internet and technology today, it’s so easy to find the best rate. Start using services online where you can find the best rates. Never ever just sign up for the first CD rate you see because you’re just asking for trouble. Your typical brick and mortar stores usually have the worst rates. This is why I would recommend you bank online.
Look at the fees:
There are so many banks out there and each of them varies. You’ll find that some want you to invest $25,000 at the beginning while others will only want you to invest $5,000. Make sure you know what you can afford to invest and what you can’t because generally the more you invest, the more you can get in terms of your rate.
The amount of interest that you can get on a CD can be determined with the help of Certificate of Deposit Calculator which requires you to feed up some details regarding the amount of deposit, required rate of return etc.
Verify the bank is federally insured on the FDIC
CDs in the U.S. are protected by the Federal Deposit Insurance Corporation (FDIC) if they are issued through a bank. You must verify the bank is federally insured on the FDIC. I assuming that they are, look at the size of the bank (assets), their capital (or equity), the Equity/Asset ratio (look for 7% or greater), their profit (or loss), age of the bank (new banks usually carry an operating loss for about 3-years), and finally their total risk-based capital (should be 10% or higher and this means the bank is considered to be well capitalized)
You can also try Bank Savings and Home Refinancing for more information
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