CD Rates are fairly low at the present. While the banks are getting practically free money from the Federal Reserve, they are giving low rates. The highest rate at around 2.5 percent can be obtained at many banks, but this might not be a wise decision.
CD Rates are fairly low at the present. While the banks are
getting practically free money from the Federal Reserve, they are giving low
rates. The highest rate at around 2.5 percent can be obtained at many banks,
but this might not be a wise decision. Inflation is expected to rise and your
rate will fall far below that of inflation within this time span.
A CD (certificate of deposit) is money that is parked until a better use can be
found for it. Many on fixed incomes use this exclusively, because they do not
have the money to risk on investments that are uninsured. A CD is insured by
the FDIC (Federal Deposit Insurance Corporation) and the U.S. government stands
behind them.
CD Rates are higher than ordinary savings accounts because they are time deposits.
You commit the money for a set period of time and are not supposed to withdraw
the money. If you do, there is usually a penalty of one month's interest. A
single CD can be purchased, or multiple CDs if that is your choice. Only the
amount withdrawn is subject to a penalty, so it is not necessary, as some say,
to buy more than one. The minimum amount for this type of deposit is not high
as some other investment instruments.
CD Rates remain the same for their duration, and if not renewed the lowest interest
rate available will kick in. Keep an eye on when they mature. These instruments
should be purchased for periods of under a year, so
