Using CD’s to protect your money

The recent recession has traumatized a lot of people. In the past, people thought that their savings were safe in the bank but the closing of some of the oldest banks has changed this. If there is one place that people should be confident about their money’s safety that would be the banks and other financial institutions; however, due to life’s uncertainties this is no longer an assurance.

Certificate of deposit is one of the forms of deposit that is attracting more and more consumers due to its high interest rate. Unlike a regular savings account, the money deposited on a CD will be inaccessible for the depositor for a specific period of time. This means the depositor will not be allowed to withdraw funds from the money until the term ends. The good thing about certificates of deposit is that your money is secured. Indeed the Federal Deposit Insurance Corporation covers these deposits so even when the bank closes, the depositors will still get some amount back. However if you own a huge amount of money the insurance offered by FDIC may not be applicable on your case because the FDIC can only guarantee deposits up to $100,000 per individual. Beyond that amount the FDIC could not do anything.  But don’t panic if you have more than the said amount in your bank right now because there are several ways on how you will get all your money protected. You can keep your money safe by buying several certificates of deposits all at the same time through a brokerage firm. This way your money will be distributed across various institutions; hence, allowing you to minimize the risk. When you do this, you can get FDIC protection for your all existing accounts.

Another service available is through the Certificate of Deposit Account Registry Service which can spread out deposits into individual certificate of deposits which can contain up to $100,000 each.

There are many other ways on how you can protect your savings aside from availing the service of deposit-placement services or brokerage such as those payable on death CDs which is now gaining popularity. The first thing you have to do however before you get any of these additional services is to check via the FDIC estimator program if your deposits are still covered by the insurance FDIC is providing. If not then you may opt to disperse your money. It is a prudent act to make sure that the money you saved through hard work will be protected whatever happens now or in the future.