The Best Way to Save In Start – Variable CD

As far as saving goes, we are all aware that CD (Certificate of Deposits) can offer better terms than regular bank savings. What makes CD’s so much better than having regular bank account and saving by just taking what is being offered by bank? To explain all this using simple words – your money is left in a bank and you promise not to withdraw it for a specific time frame. The longer you agree to have bank keeping your money, the higher the interest rate will be.

There are different CD’s to choose from and each has its ups and downs – sort of speaking.
Which one should you choose depends on your short and long term plans. There also may be minimum investment amount and you must have to be eligible for CD, but again it depends on the length of the contract.

We have all heard about terms such as variable CD, fixed and adjustable CD.Let’s just see what exactly is being offered depending on the amount of money you are ready to invest.

  • Variable CD – for this kind of CD you will need to be able to make minimum deposit of $ 250 (not with all banks). Interest rates can vary daily and you can make further deposits anytime you want – this is best type of CD for people who want higher return than traditional savings with bank account and still have the option of making further deposits in a long run.
  • Adjustable CD – for this kind of CD you will have to make an initial deposit of $ 1000 (again this depends on the bank). You will have higher interest rate than with previously mentioned CD but won’t be able to make more than one additional deposit (resulting with better interest rate).
  • Fixed CD – this is ideal CD for people who have larger amounts of money (you can usually start with $ 1000 deposit but the more you invest the better) and are looking to make long time investment. Those have highest interest rates and can be signed with short time intervals (30 days) or can be long term (up to 5 years or more).

At the end, a quick tip for “starting savers” – if you have smaller amount of money to start with, your best choice is variable CD. You can start small and add money later, the interest rate may not be as good as with other types of CD’s but in a few years you’ll have enough for your next CD.

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