Certificate of deposit as an attractive mode of investment
According to research, more than $29B (twenty-nine billion dollars) certificate of deposit balances are used to pay-off credit card loans during the early part of 2010. A firm which tracks fees and rates on deposits and loans mentioned that CD balances dramatically dropped from $2.36 trillion to $2.16 trillion during the first half of this year. Out of the roughly $200 million drop, 15% went to trying to reduce credit card debt. This is an important development according to some finance experts. Since credit card debts have dropped, it means that consumers are now having an easier time paying debts on time. But this does not guarantee that Americans are now handling their finances better. Nowadays, people have been suffering from financial difficulties resulting fro their debts and financial advisers believe that the certificate of deposit may help people overcome this problem.
What does Certificate Of Deposit or CD mean? It is a savings certificate stating that the bearer is entitled to receive interest. It has a maturity date, a fixed interest rate and it can be issued in any denomination. CDs are issued generally by commercial banks the term ranges generally from a few months to five years. A certificate of deposit may also mean a promissory note from a bank. It is like a time deposit which restricts an individual from withdrawing money on demand. It is still possible to withdraw but you may often have to pay for penalties.
While a lot of people have already benefited fro them, some still do not fully understand what a certificate of deposit is. We want to clarify some facts and make it a easier to comprehend about this kind of savings method. When the proper certificate of deposit is picked, it can result to a significant return on investment. A lot better than money you usually earn from a simple savings account, even a savings account which claims to have high interest rate. People would just have to know the kind of certificate of deposit they really need.
As mentioned, even the regular savings account with high interest would not be able to earn as much money as a bank certificate of deposit. It therefore makes an perfect investment with better chances of a good return of investment. When you purchase a certificate of deposit, the bank would designate a maturity date. Only on the said maturity date would you be able to withdraw money. Doing otherwise would result to being penalized.
