Best Liquid CD (Certificate of Deposit) Rates

One of the most popular investment options is the certificate of deposit or CD. You deposit your money and agree to keep it until a given date in return for an interest rate. This is how traditional CD's work.

There is a difference with the Liquid CD. While most types are generally inaccessible by the investor before the maturity date, this type of CD can give you all the privileges to withdraw your money anytime without penalty. This of course is a very good advantage especially when you have a sudden need of your money. With this advantage comes a drawback though; the interest rate is generally lower than the other CD types. So if you are after an investment with a higher yield this may not be the kind of investment that you would prefer.

Basically, a notice of withdrawal should be submitted before a withdrawal from your CD could be made. A minimum balance should also be in the account to qualify for the withdrawal. It would also be very important that you read and fully understand the terms and policies because there are some banks that set limits when it comes to the withdrawal amount for a certain period of time.

A liquid CD is typically short-termed. The term is usually a year but like all the other CD's, you can roll it into a new account when it reaches its maturity if you wish not to withdraw it. The term for liquid CD is set by your bank. The minimum size or amount of liquid CD's is $5,000. You can have a term for three months to a year. Usually the allowed withdrawal scheme from your fund is $500 weekly. Another distinct feature about this kind of CD is that you actually can put in additional deposits which is not allowed with the traditional CD's. In other words, Liquid CD's acts like your money-market account only that rates are lower and fixed. There is no penalty incurred when the fund is taken out before the maturity date but you may be charged when the withdrawal limit is exceeded.

Liquid CD's are far better than a savings account since the rate is guaranteed and is FDIC insured. This CD is pretty much popular with retirees who live up with their income through IRA. It is most preferred by these groups of people because they can access their money anytime they needed it.

CD's are very safe way of keeping and investing your money but with one significant risk. If the interest rates would rise before the maturity date comes, you will likely lose out on your income. However this does not apply with the Liquid CD's. When interest rates rise, the depositor can withdraw all his fund and apply for a CD with a higher interest and the reverse. When rates go down, you can as well move out your fund into a CD with a guaranteed rate until the maturity date comes.

But the best thing you should not forget is checking on the bank's reputation. Invest more time and effort comparing and you'll soon find the best rate with the best bank.