Certificates of deposit (CDs) are an excellent choice if you’re seeking a secure location to put your assets and receive a competitive return. They frequently provide interest rates that are greater than even high-yield savings accounts and provide a fixed-term interest rate guarantee.
When you start the account, the interest rate is fixed, so even if general interest rates decline, your profits will remain unchanged. Federal deposit insurance also covers CDs, so your money is secured up to $250,000 per account, per institution. Nevertheless, CD rates might differ greatly from account to account. There are various things you can do to maximize the return on your investment.
Shopping around is one of the simplest methods to raise your CD rate. There are several CDs available, and credit unions and banks are vying for your business. Therefore, spend some time comparing prices to find the best deal with the terms and circumstances you require.
For new or current clients, certain banks and credit unions are offering unique CD deals. These promotions could include fee waivers, higher-than-average interest rates, and other rewards. Generally speaking, interest rates increase with CD term length. This isn’t always the case, though.
For instance, a handful of short-term CDs currently provide rates that are greater than those of long-term CDs.
The ideal term for you, then, will depend on how long you want to invest. Even though a long-term CD offers a higher rate than a short-term one, it isn’t the ideal option for you if you need the money sooner rather than later.
A jumbo CD could be useful if you have a lot of money to invest. However, keep in mind that a jumbo CD’s minimum deposit might be $100,000 or more, so you should only consider it if you can easily satisfy these criteria.
The CD ladder approach involves spreading out your funds over a number of CDs with various periods. With this strategy, you may take advantage of the greater interest rates longer-term CDs may provide while also ensuring quicker access to part of your money in case you need it. Additionally, it enables you to benefit from any rise in interest rates.
Finally, don’t be hesitant to haggle for a better CD interest rate with your present bank or credit union. If you have strong credit, a history of working with them, or a sizable deposit to make, they could be more inclined to give you a better rate in order to maintain your business.
The worst they can say is no, so it’s worth a shot. A sensible and secure approach to increasing your savings is by purchasing a CD. However, some planning and research are needed to achieve the best return on your investment.
Source: CBS News