CD Rate

CD Rate

What is a CD Rate? You can read about CD Rates Definition on my other article: CD Rates. If you’re still unfamiliar with a CD, here I give you a quick cliff note version

Basically, you’ll set aside x amount of dollars. Let’s say you want to invest $10,000. Then you’ll figure out how long you’ll want to invest your money. Generally, the longer you let the bank hold it, the better the rate you’re going to get. So, let’s say as of today, you want to have your money held for 1 year at 5%. At the end of the year, you can withdrawal your money and you’ll now have $10,500.

Remember! Wait for it to mature – As long as you don’t withdrawal your money early, you’re not going to risk being penalized. By the time the CD matures you’ll earn a reasonable and secured rate of interest.

Generally, investment in certificate of deposits (CD) and money market mutual funds (MMMF) are helpful to people for short-term objectives such as buying a car, a house, etc. These types of investments will not provide any quick incentives but will provide highly secured income

Money market mutual funds offer you a lower interest rate than CDs. However if you know you’re going to need that money, it’s probably wise that you apply for a money market account, where you won’t have your money locked in for a long period. Instead, you’re still earned interest on your money.

CD rates generally are higher online than they are in a brick and mortar bank. The reason bank’s online are able to keep rates so high are because they don’t need to maintain thousands of branches, employees, etc. Of course you’ll love to invest your money in online bank. But, be sure to check if the bank is FDIC insured.

Most banks online are FDIC insured. If you don’t know if they are FDIC insured, you can simply check for the logo on the webpage, check the FDIC main website (fdic.gov), or simply contact the bank.

An article by Deliyami Yeo you may be interested in reading: Small loans and Citifinancial