Learning what the variable CD rates are

The banks and all the other financial institution put numerous products at the disposal of those who are searching for ways to save money or to earn interest. The certificates of deposit, also known as CDs, represent such a product. Those interested in this financial product should be aware of the fact that it is available in two forms: the fixed CDs and the variable CDs. A fixed CD has a fixed rate, while the rate of a variable CD is, of course, variable. They both have their advantages and their disadvantages, but it seems that numerous people feel more attracted to the idea of choosing a variable CD.

Let’s learn more about the CD and what it is. Those who don’t know this yet, the certificate of deposit is nothing else but one of the numerous types of banking products. If you choose such a product, then you pledge to leave a certain amount of money on the deposit you own at a financial institution. You receive in exchange a rate of interest that is much higher than the one offered by financial institutions for the savings accounts and for the checking accounts. Those who choose the variable CD in the detriment of the fixed CD will receive an interest rate that will change throughout the CD’s term. The CD’s term is nothing different from a saving account term, as it is the period of time during which you leave the set amount of money in the deposit you own at the financial institution you work with.

Those who have decided to choose a variable CD should also make a decision on which type of variable CD to choose. The indexed CD is the disposal of those interested, which is a variable CD that has the rate established by the federal government. The Federal Prime rate is an example of rate established by the government. The scheduled variable CD is another type of variable CD, one that has rates that change on a periodical basis, according to a schedule that is set from the very beginning of the variable CD opening.

These two types of variable CDs have their advantages, but they also have their disadvantages. Choosing a variable CD type can be a complicated task, but the financial expert working for the financial institution you choose will surely be able to answer all your questions and help you make the right choice. It is recommended to ask for financial advice, as you learn numerous important details by doing this. For example, you learn about the indexed variable CD the fact that one of its advantages is represented by the depositor’s permission to withdraw money earlier than the established term without suffering rate penalties. A non-indexed variable CD will only allow the depositor to withdraw money in the days established through a schedule. Any other withdrawal will attract a penalty.

As you can see, there are plenty of things you should know about the variable CDs, as they can help you save much more money than you would have expected!