Unlock Guaranteed Returns By Finding The Highest CD Rates Today

A CD is a Certificate of Deposit and it’s a popular savings product, often used as an alternative to a basic savings account. They are also known as time deposits. They are regarded as safe, because the interest rate is set beforehand, so you know you will make money. CDs at most banks are insured by the FDIC for up to a certain amount - currently $250,000. At credit unions they are backed by the NCUA (National Credit Union Administration). CDs have specified terms, so early withdrawal will result in a penalty fee. The set term can vary from three months up to five years, with the highest yields coming from the products with the longest terms.

Why choose a CD

Ultimately a CD is a ‘safe’ place. You won’t lose your investment (as long as it’s insured) and you will make interest on it too. IRA CDs can also be used as part of a retirement plan. Callable CDs are where the bank can choose to ‘call’ (close) the account during the agree time period – these usually have a higher rate of interest though you risk the account closing early, of course.

The drawbacks

Investing in a CD is a commitment. If you need to withdraw the money you will have to pay for that. You can’t make a partial withdrawal – if you need the money, you have to close the CD and pay the fees. Longer terms have higher rates, but this means your money is tied in for longer. Also, as the interest rate is agreed in advance, you might find it’s not the best return on your investment if rates go up in the meantime.

Finding the best CD

Look at online banks as these can have the highest rates. You may also get a good rate if you join a credit union (bear in mind they may be called share certificates here). Also, keep a lookout for special deals, as new products in the market sometimes come with a promotional rate. Make sure your CD is insured – look out for the FDIC and NCUA badges. There are also ways in which you can increase yields, known as CD ladders – these are more complicated and involve investing in a number of short and longer term products. If you want to do this, make sure you do your research or even consult a professional beforehand.