2012年9月17日 星期一

Do You Like the Certificates of Deposit Rate


Certificates of deposit is really the investment choice of the majority. It is popularly known as CDs. Many people purchase them without any knowledge of certificates of deposit rate and how it might affect them. When you know a little bit more about the rates or what affects the rates, you can maximize the potential of this type of investment and really make it work well for you.

You need to be aware of the fact that certificates of deposits are very similar to savings account and they also have functions like one. One major difference is that certificates of deposit carries a fixed term like three months, six months, one year or even multiple years and most do also have fixed interest rate. The main idea is to leave the money in the CD or certificate of deposit for the chosen term, after which you can withdraw the money with the accrued interest.

Actually, the benefit of certificate of deposit accounts is that because of the fixed term, your interest rate is usually higher than savings account that allows withdrawal anytime. Most certificates of deposits do come with fixed rates, but some banks and credit unions also offer variable interest rates. Some CD's are tied to the stock market or even the bond market. This can be risky as far as the interest rate you get, but the payoff can be huge, depending on how the associated market does during the duration of the certificate of deposits.

Keep this options in mind if you are considering certificates of deposit:

Just so true, the larger your deposit, the higher the interest rate you can expect. Also, the longer terms will get you the highest rate. You should also know that, smaller banks and credit unions generally offer higher interest rates. Your personal CD accounts generally do get higher interest rate than business CD accounts. Some financial institution that are not insured by NCUA or the FDIC often offer higher interest rate because of the risk involved.

As you can see, when you are considering the certificates of deposit rate there is a lot that goes into it. The above rules will apply to about 99% od CD's accounts, you might find some instances where they will not. Remember, financial institutions are able to set up their own rates, so be sure to ask for better terms if you are depositing a very large sum. In some instances it makes more sense to have several CD's for smaller amounts while other times it makes sense to have larger principal amounts. Shop around and choose the certificate of deposit rate that best fits your need and is associated with a term that also fits your needs.




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