A certificate of deposit or CD account is a type of low risk investment where you put away a certain amount of money for a fixed timeframe, usually ranging from 3 months to 5 years. A CD is usually best suited for people who have cash that they will not need in the near future but, at the same time, are reluctant to invest in riskier options. However, you want to make sure you use a certificate of deposit correctly and to your advantage to get the most out of it for yourself.
• In many instances, the longer the timeframe you can commit your money to the certificate of deposit, the better interest rate you will get. Financial institutions usually have different rates associated with different CD time periods. If you’re able to commit your funds for a decent timeframe, a CD may be best for you.
• Look for financial institutions that clearly state their rates and may even be offering a CD special. You want to make sure you do your research, trust the financial institution you work with and get a rate that is best suited for your situation.
• Before committing to any CD, be sure to review the terms and conditions properly. Many certificate of deposit accounts are accompanied by rules and penalty fees for withdrawing funds before the specified timeframe. Be sure to read all fine print to ensure the certificate of deposit will work for you.
• Lastly, before opening a certificate of deposit, always make sure you will not need the money in the near future. If you end up having to pay penalty fees for early funds withdrawal, it could negate the interest funds you have accrued from the CD.
Overall, certificates of deposits are a great investment for many people, and provide a low risk solution for investing money. If you’re interested in learning more and applying for a certificate of deposit, click below!