Certificate of Deposits - does it have a good return

There are so many banks these days that are offering certificate of deposit account with varying interest rates. You can review the terms of each bank you are shopping with and find out the best CD rates for your CD. When you are considering a CD, review the length of the time of the CD and the current interest rate. The interest rate will be higher on a CD for a longer period of time. The bank will be utilizing your money for varied purposes and that’s why they offer high interest rates on the deposits for longer duration.

Best CD rates will be determined on the basis of the present interest rates. The banks will offer competitive interest rates and if you are not aware of the present interest rate, you will not know how much rise the bank offered to you because of the competitive market. Rising interest rates give rise to an increase in CD rates.

Browse through the internet and get the tips on the best CD rates. Make sure that you shop around to get the CD offering the best CD rates. Most of the banks will advertise their products on newspapers, mails and banners and you will find out more about competitive institutions.
Best CD rates are often offered by the credit unions. Check on the credit unions and the government organizations so that you can compare their rates with the private banks offering the CD. In this process, you will surely bag the best CD rate and get a good return on your investment. Sometimes, most of the investors distribute their money in different institutions rather than putting everything in one place. Most of the institutions offer “preferred customer” CD rates when you are buying in bulk or consolidating your assets in an institution.

In some cases, banks will offer better interest rates to CDs of shorter length. This is done with the intention of catching in more customers in the competitive market. Once the limited period is offer, the interest rates will start to change. That’s why it is better to first see the present interest rate before deciding on the term of the CD.

Though CD may be considered to be a good investment, there are some downfalls attached with it. The first downfall to review is that when you purchase a CD, you will be locking your money for a fixed period of time. Just in case, you want to withdraw the amount before the expiry of the term, the financial institution will charge you a penalty. Before you buy the CD, make sure that you have reviewed all the terms and conditions thoroughly so that you are well aware of all the associated costs.

Safety is always important while buying a certificate of deposit. Make sure that the institution from whom you are buying the CD is listed with the FDIC. Credit unions are not FDIC insured. They may be offering you better deals but since they are not FDIC insured, you will be putting your money at risk.

Finally, keep in mind that if your risk level is low while purchasing the CD, the reward level will also be low. Do your research before purchasing the CD and looking for the best CD rates.