Getting the Best CD Rates for Your Money

During these times, people need a safe place to keep their money. A certificate of deposit offers this security with the advantage of gaining interest. It’s like earning money for lending your money to the bank though you are secured with your deposit as long as it is insured by the FDIC. The first thing you have to do when you’ve decided on investing on a CD is to find the bank to which you will entrust your hard-earned money.

Finding the right bank starts with finding the one with the best rates. You can begin with reading the newspaper. Check out the business or financial section for posted CD rates and take note of the highest you will find. Next is to see bank websites or independent websites that compare CD rates. That way, you will have a summary of rate comparisons and also an idea of the APY (Annual Percentage Yield). Though you should also watch out for the information you will find in the internet because some of the terms may not be included.

You could also opt for a financial advisor but the best way may be to go to your prospective banks and inquire about their terms and conditions. Here are some questions you will need to ask:

1. What is the minimum amount for deposit? Some banks do require a minimum amount for a CD depending on the type of CD you would like to avail of.
2. What is the interest rate? This is the question where you ask how much you will be able to earn with your money.
3. How long will it take until the CD matures? You have to understand how long your money will be stored in the bank before you can withdraw it. Some investors don’t make this clear and get shocked to find that their money has been applied for a 3-year or a 5-year term and they won’t be able to withdraw their money until after these periods.
4. How will the interest be given to you? Banks may send your interest through checks that are mailed periodically or may be deposited to your savings or current account and some may compound your interest to your CD; however, it all depends on you, the investor.
5.  What are the penalties for an early withdrawal? Withdrawing your money before the maturation could cost you a chunk of your interest or you could end up paying the bank as penalty.

While on the occasion of finding your bank, get the best interest deals with some of these tips:

1. Negotiate for the interest. Ask for a higher rate and if they won’t negotiate, try other banks until you find the one that suits your prospected rate. Talk to the manager if needed, the important thing is that you try to negotiate.
2. Do good research. While it is well-known that the longer the term, the higher the rate, there are also some instances wherein short maturity dates could result to higher interest yields. There are also those banks that offer good deals just to attract investors. These could be spotted if you do good research with your comparisons.
3. Brokerage CDs. You can get CDs through banks, credit unions, or other financial institutions, but you can also get them through brokerage firms or deposit brokers. While it is true that you could find high interest rates through brokers, there are also commissions that are attached. So, you should understand the advantages and disadvantages of availing for brokerage CDs.
4. Pay close attention to your CDs. When your CD reaches its maturity, you will be notified by the bank, but if you fail to contact them, your CD will automatically be rolled over at the prevailing rate which could be lower than the original rate when you bought the CD. This is not a good deal especially if you only have one CD account so pay attention to your CDs.