Find the latest bank certificate of deposit account and bank CD rate information. Shop and compare certificate of deposit rates on a variety of bank CDs. Review current certificate of deposit information to find the best certificate of deposit and bank CD rate to match your needs. Learn about bank certificate of deposit accounts from traditional banks and online banks. Open a certificate of deposit account with the right tools and information. Bank certificate of deposit account information covers the best certificate of deposits available for consumers. Top bank certificate of deposits reviewed along with high yield certificates of deposit from FDIC insured banks.
 


When No Penalty Bank CDs Might be the Right Savings Choice

Traditional bank CDs come with penalties for early withdrawals that can be costly and confusing.  Though these penalties can be quite burdensome for those account holders that want to withdraw their funds before the term to maturity has been reached, most certificate account holders pay very little attention to the amount of these penalties.  Fortunately, there are a number of banks that promote a more unconventional certificate of deposit product that vanquishes the standard early withdrawal penalty, the no penalty CD.

No penalty CDs dispense with traditional early withdrawal penalty fees, allowing the depositor to withdraw the full amount of their CD deposit after only seven days without incurring any penalties.  Unconventional CDs such as the no penalty CD however, often come with a caveat or two.

The most common limitations with the no penalty CD are lower interest rates compared to similar term certificates and shorter terms to maturity.

Most no penalty CDs have a term of one year or less. After all, banks are not going to offer one of their highest yielding savings products, certificates of deposit, without some benefit for the bank.  Early withdrawal penalties are a means of keeping the bank’s customer’s account captive allowing the bank to better manage their costs of funds.  A long term certificate without an early withdrawal penalty would be a foolish product for a bank to offer.

Lower interest rates on no penalty CDs is, perhaps, the more crucial tradeoff found on these accounts that frequently keeps prospective savers and investors at bay.  Account holders will typically have to accept a much lower interest rate in exchange for the right to withdraw their funds penalty free.

Fortunately, there are market opportunities when banks start competing for depositor funds and heavily promote the no penalty CD products.  When banks compete for depositor funds, some of the rates and terms promoted on the no penalty CD products compare favorably with traditional certificates and the customer will not only obtain a competitive, fixed rate of return but the depositor does not have to endure the risks with that come with locking up their funds a prolonged period of time since there is no penalty for taking the money back.

No penalty CD and the CD rates earned on these products can be a very valuable savings opportunity for a variety of investors and bank customers.  As always, astute banking customers should search and compare all of the available highest yielding CD rates before committing to a new account.

Consider the Flexible Savings Options with Bank CDs

Savers and investors that are looking for a short or long term savings options in today’s muddled investment climate may find the features and rates of return offered by certificate of deposit (CD) accounts are just the financial product that fits their needs.  Most consumers are well aware that bank CDs are FDIC insured and their deposit and interest earnings are therefore protected. 

With a fixed rate CD, the most common type of certificate account, the government insurance program assures account holders will get a guaranteed return for the term of the account holder’s choice.  Common terms for CD accounts range from 3 months to 5 years, but shoppers can find CDs available for all sorts of maturities or time frames. 

The biggest barrier to opening and holding CDs with many investors is they don’t know how long they should commit their funds to a new CD account.  With most bank CDs, the early withdrawal penalty that is assessed for taking out funds prior to the maturity date will not only wipe out any returns the account holder may have accumulated but may even put the account in the red. 

When comparing current CD rates, prospective account holders will notice that typically, the longer a CD’s term, the higher its interest rate.  If someone knows they won’t need access to their money for a prolonged period, they might be more comfortable putting it in a long term CD with a higher interest rate.  On the other hand, if an investor expects to need access to their money earlier, they might look for a CD with a shorter term and accept the lower rate. 

However, many rate shoppers become concerned about the future path of rates.  When they compare the best CD rates now they may find that rates have rises after they already locked in a fixed rate.  To help balance the difference between long and short term rates with the investor’s time horizon, careful selection of the right CDs has to be made.

Given the large number of bank CD options available, account holders don’t have to accept stingy interest earnings nor do they have to give up liquidity.  Many savers can earn higher yields on their CD accounts with a little research or with some slightly more complex approaches to holding these accounts.

Strategies like CD ladders or barbells can help increase returns and manage liquidity when opening and holding an account straight to maturity does not provide the necessary returns.

A CD ladder is a strategy where the investor buys or opens several CDs that mature at different intervals over an extended period of time.  With CD laddering, the investor divides the total amount of money they want to invest into equal amounts and put it in CDs with different maturity dates.

By opening several CDs with staggered maturities, the account holder can take advantage of higher rates with longer term CDs, while enjoying added access to their money with shorter term CDs.  Investors can not only maximize their potential earnings but they can also determine the frequency at which you’d like them available.

CD ladders can be constructed with short-term maturities, such as three months, six months or nine months or with longer terms such as 24 months or 60 month maturities.  Changing the spread between account maturities can help manage liquidity along with helping to match the investor’s investment time horizon.  There is no limit to the quantity or the frequency in a CD ladder, as long as the banking customer meets the minimum deposit requirements of their institution. 

Changing the distribution of the very short terms and long terms of the ladder can lead to the creation of a barbell strategy.  With a barbell strategy, the investor opens only short term CDs in addition to long term CDs.  The short term CDs in a barbell strategy are reinvested once they mature, the quickly impending maturity times mean that the investor must reinvest the proceeds.

A barbell strategy is generally designed to take advantage of increasing interest rates.  As the short term accounts of the CD portfolio are always being traded out as they reach maturity, when rates are rising the new CDs will pay higher interest than the maturing accounts did.  And if interest rates fall, the long term CDs help save the overall portfolio rate of return because they’re locked in at the older, higher interest rates.

Investing in a CD can stabilize the overall return to the consumer without sacrificing too much liquidity regardless of how the account or accounts are held.  With a good strategy and some patience, CD accounts can be the foundation of a solid financial plan.

Bank CDs Guaranteed Returns can Help Savers and Investors

Certificates of deposit are offered by most every bank and credit union.  Because of their ubiquity, these savings vehicles are often overlooked for their true value as a fundamental savings and investing tool.  CD accounts from banks and credit unions can help boost almost any savings plan or investment portfolio.  

On average, certificate of deposit accounts pay a higher rate of return than interest earning checking accounts, savings accounts or money market accounts.  Unfortunately, a number of savers take a pass on these higher rates with the belief that the returns available are not going to turn them into the next Warren Buffet.  While these high yields should not be ignored, there can be several reasons to use these savings vehicles above and beyond the yields they offer.

CDs offer the above average rates at fixed levels for predetermined terms.  For the account holder this means the bank and credit union CDs will always hold their original value, unlike the stock market and other asset classes.  Savers and investors in CDs can get a fixed rate with a guaranteed return, regardless of what the market does.

CD holders will earn the competitive rate virtually risk free.  Bank CD deposits are insured by the Federal Deposit Insurance Corporation (FDIC) while federally insured credit union certificates are insured by the National Credit Union Administration (NCUA).

Individuals can open a CD with as little as a few hundred dollars.  With limited barriers needed to open a high yield CD, the accounts have low minimum deposit requirements and can be found locally as well as online, these savings vehicles offer the account holder an opportunity to make every dollar count. 

The flexible terms available with a CD offer a number of options to help save whether that means savings for needs that may arise in a few couple months or an investment horizon that runs for several years.  Prospective investors can not only choose the term and deposit amount that matches their budgets and savings needs, but they will find CDs with less traditional features that may work even better for their savings needs.  Non-traditional CD features include step up CDs or bump CDs that have built in rising rate options, liquid CDs that offer no prepayment penalties, and variable rate CDs that rise and fall with market interest rates.

The inherent nature of certificates, with their safety and reliable returns, also make these financial products an important source for investment diversification.  CD accounts can be used as just one component in a portfolio of investments to stabilize the overall return without giving up a lot of liquidity.  Investments can also be made in multiple CDs as part of a specific financial strategy.

CD account holders can invest in multiple CDs to get added diversification or engage in some more complex strategies such as creating account ladders or barbells that involve selecting certain terms and account types to take advantage of higher yields while maintaining certain level of liquidity.

Not all CDs are created equal however.  Choosing the right certificate of deposit will ensure that the account holder is getting the best rate with the account features that meet their budget and investing needs.  Finding the best CD rates to match an individual’s needs can be accomplished relatively easily by simply shopping online to compare the highest local and national rates on the market.

CD Automatic Renewal Policies

A number of banks promote CD automatic renewals as a convenient feature while some customers have this feature to be anything but convenient.  Most banks set up their CDs so that they automatically renew when the certificate reaches maturity.  When the CD renews, the bank places the funds into another certificate for the account holder with the same term as one that expired at the current interest rates offered by the bank for that particular term certificate.  The same terms and conditions apply to the new CD regarding features such as the early withdrawal penalty and related conditions.  While the new CD will typically have the same term as the matured CD, the CD interest rate may be much lower than the one has reached maturity.

With the automatic renewal feature, account holders can still withdraw their money before it is rolled over into another new term CD.  When the CD reaches maturity and is set to automatically renew into a new CD, there will be a grace period that is generally between 10 and 20 days during which time the account holder can withdraw their money, penalty free.

Account holders that fail to pay attention to the grace period and do not want the expiring CD funds to be renewed into a new term and interest rate will be hit with an early withdrawal penalty.

Before purchasing a CD, bank customers should review the account terms and conditions to confirm the maturity date and whether there is an automatic renewal option.  If the CD is one with automatic renewal, the account holder should note the maturity date and the amount of time for the grace period or how much time the account holder has between the notice and the deadline to take action for penalty free withdrawals.  Bank CDs that do not have automatic renewal features are referred to as single maturity CDs.

CD Investment Barbell Strategy

CD investments can be made as a single account or by using a number of different investment strategies.  Bank CD investors can simply buy one, two or more certificates that meet their need for yield or investment diversification or an investor can get involved in a more intricate strategy of buying CDs with different maturities in sequence which is referred to as a CD ladder or still yet they can buy bank CDs that establish a barbell investment strategy.

A barbell strategy is used to maximize the benefits from the CD accounts targeting the maximum yield while maintaining liquidity.  When investing in CDs with a barbell strategy, the account holder will buy both short term certificates as well as long term certificates without holding any midterm CDs.  The reason for this strategy is that it allows some of the bank CDs to achieve high yields, the longer term certificates, while the other portion has less risk and more liquidity.

The name for this investment strategy comes from the shape of the account holdings if they were laid out on a time horizon scale.  The shape of the CD investments over time will show a bulge on one side representing the short term CDs and a similar bulge on the other side representing the long term CDs which should reflect the shape of a barbell.

A number of different bank CD terms or maturities can be used for either the short term or long term CDs.  The most important criteria are to keep the dates of maturities either very close together at the short end as well as at long end.  For example, an investor might be investing in a three month term CD as well as a three year term CD under this strategy or a six month CD and a five year CD or similar term combinations.   Both sides of the barbell, the different term CDs, need not be equally weighted with same total investment amount.

As the short term bank CDs reach maturity, the account holder can decide how to invest funds including allocating the funds to different term CDs or new short term certifies to maintain the same amount of money in the overall investment account strategy.

Two benefits to this CD investment strategy is that it allows the account holder to take advantage of bank CD rates when they’re high, without limiting financial flexibility and by allocating only part of a bank CD portfolio in long term certificates the investor can help reduce the risk associated with potentially rising interest rates in the short term.

Compare CD Rates on the Short Side of the Curve

When short term bank savings rates are low, many savers and investors spend very little time trying to find the best bank rates and accept their local bank rates hoping for the market turn. If the interest rate market does turn quickly, the sub par interest rates earned at the most convenient bank will end up costing very little. However, should interest rates remain low for an extended period of time the opportunity cost incurred by holding your funds in low rate bank account can be costly.

It is a common response for savings account holders to pay too little attention to the range of yields available in the market when interest rates have fallen. Just because bank deposit rates have moved lower and may have very little room to fall any further is not an indicator that interest rates are due to rise.

For those consumers that count on interest earnings from bank CDs, savings accounts and money market accounts frustration has grown over the meager yields available. But while bank deposit accounts are in fact quite low, Treasury rates are measurably lower than the best CD rates and best savings account rates.

One of the key lessons during these times is that savers have to be more diligent in their search for the best interest rates on CDs and bank accounts. Even when banks are flush with reserves and rates are low there are always online banks and mid size banks on the lookout for ways to grab a little extra market share.

One solution is maintain a course of dilignce by shopping and compare for the best bank rates available and constinue to allocate funds to bank CD investsments. Some banks offer higher yielding CDs than other banks, but the only way to find the best CD rates is to shop around and compare national CD rates along with regional bank rates.

Don’t always search for the best CD rates with the banks you know. Some of the banks offering the best CD yields may be unfamiliar to you. When reviewing the available offers, consider CDs from online banks, which my be offering higher interest rates than traditional brick and mortar banks because of their lower overhead.

Savers that are hungry for extra earnings on their CDs may think they have missed the boat on higher interest rates may also be pleasantly surprised to learn that there are banks paying interest rates well above the national averages. Good CD interest rates are readily available on 3 month term CDs as well as 6 month term CDs. CD interest rates that are higher than most other short-term, low-risk options available to consumers.

For more information on the best CD rates by term refer to the following pages; 3 month CD rates, 6 month CD rates, 1 year CD rates, 2 year CD rates and 5 year CD rates.

To see a list of the best rates on CDs please refer to Best Rates on CDs.

Additional state specific CD rates can be found at California CD Rates, New York CD rates, Florida CD Rates, Illinois CD Rates, Pennsylvania CD Rates, Ohio CD Rates, Michigan CD Rates, Texas CD Rates.

How to Find the Best 3 Month CD Rates

With the Federal Reserve maintaining a low interest rate environment, many investors and savers look to short terms CD rates as safe and secure account to hold their savings while the wait out the future course of interest rates. While investors and savers contemplate their investment goals and plans, they often question how to find the best 3 month CD rates.

The answers on how to find the best 3 month CD rates is not a difficult one but it will involve some work by the CD rate shopper. Local banks and big national banks often do not compete aggressively for new money in high yielding accounts. If a rate shopper were to review the bank rates of the thousands of U.S banks they would find too many commercial and savings banks still offer anemic interest rates on their certificates of deposit.

One type of bank that is frequently on the top of the list for the best 3 month CD rates are online banks. Online banks have fewer expenses due to the lack of a bank branch network and this cost savings allow these banks to pas on higher yields to their customers. In addition, in this highly competitive arena where consumes will gravitate to the bank based on interest rates alone, online banks watch what their competitors are doing, to ensure their special rates can be used to attract new money.

But it’s not just rates that consumers should be comparing when reviewing the highest CD rates, account conditions are also critical to consumers looking for a secure place for their money. Account conditions to consider should include the early withdrawal penalties associated with the account, the bank CD account renewal policies and the ease of access to the bank and bank CD account.

Of course, rates and terms are only part of the CD shopping process, and some otherwise attractive CDs are out of reach because they require big minimum deposit requirement. Be sure to review the deposit requirements before you narrow your search down to the best CD rates for your needs.

If you’re serious about finding the best deal, try the Internet. Most banks have easy to navigate Web sites, so you can sit at your home or office computer to research and check out new bank offers – including any minimums or other special conditions – at most banks in the region.

Always check out deals from within your geographic region and outside the area. To take advantage of the best 3 month CD rates or any short term CD rates, you have to shop around for the best deal.

A good 3 month CD rate will provide a competitive rate of return that will not keep your money tied up forever, allowing you to make investment adjustments if rates change dramatically. And a short term CD will often pay a lot more interest than a savings account or money market account.

For more information on the best CD rates by term refer to the following pages; 3 month CD rates, 6 month CD rates, 1 year CD rates, 2 year CD rates and 5 year CD rates.

To see a list of the best rates on CDs please refer to Best Rates on CDs.

Additional state specific CD rates can be found at California CD Rates, New York CD rates, Florida CD Rates, Illinois CD Rates, Pennsylvania CD Rates, Ohio CD Rates, Michigan CD Rates, Texas CD Rates.

How to Find the Best Six Month CD Rates

Shopping for the best CD rates can often be a time consuming task. There can be a number of factors that determine which bank CD best matches your needs including the CD term, minimum deposit amount, CD interest rate and bank services offered. Bank CD investors that have already narrowed their search down to a six month term are making the task measurably easier. Discovering how to find the best six month CD rates is a quest that can be accomplished quickly and easily.

Banks reward CD account holders with higher interest rates for longer CD terms but the account holder has to make a sacrifice by giving up liquidity in turn for that higher rate. The loss of liquidity is due to the early withdrawal imposed on the CD account holder should they want access to their funds prior to the CD date of maturity.

A compromise on this trade off is the shorter term CD, six month CD. These certificates have a short enough term so that the account holder doesn’t lose a significant amount of liquidity and has access to their money in a relatively short period of time. The six month CD aloes pays a very competitive interest rate.

Six month CD rates generally pay higher interest rates than savings accounts, money market accounts and all but the longer term Treasury rates. Bank CDs with a six month term are one of the most popular choices among savers.

Once you have decided to invest your money into a six month CD account, the next step is the select the right bank with the highest CD rate. Online bank rate websites that have comparison tools can be very helpful for quickly finding the best six month CD rates. The best online sites compare the highest national CD rates as well as the highest CD rates by state or region.

These bank rate comparison sites allow the user to compare the bank services and bank rates for different accounts in an efficient manner. The online comparisons are easy to navigate even for rate shoppers that are not familiar with these services. The online search can be augmented by a local search of banks and financial institutions in your area to further compare the best rates.

When comparing the best six month CD rates and the banks offering these rates, be mindful that there may not be one bank that fits all of your financial needs. The six month CD is a great investment choice for any saver or investment portfolio, the key to owning these CDs is obtain the best six month CD interest rate with the minimum balance that meets your needs. Once you have identified your priorities, then it is easier to find the right bank and the right account.

For more information on the best CD rates by term refer to the following pages; 3 month CD rates, 6 month CD rates, 1 year CD rates, 2 year CD rates and 5 year CD rates.

To see a list of the best rates on CDs please refer to Best Rates on CDs.

Additional state specific CD rates can be found at California CD Rates, New York CD rates, Florida CD Rates, Illinois CD Rates, Pennsylvania CD Rates, Ohio CD Rates, Michigan CD Rates, Texas CD Rates.

How to Close a Bank CD Account

In order to earn the higher returns that CD investments provide over other comparable secure investments, the account holder is required to keep the deposit at the bank for a fixed period of time. Banks generally charge a penalty fee if the money is withdrawn from the CD before it matures. Since the early withdrawal penalty can be a sizeable burden, a bank CD account holder should know the CD term in advance of opening the account as well as how to close a bank CD account.

The penalties for early withdrawal on a CD account may vary from bank to bank and often the penalty is fairly substantial relative the earnings the CD account generates. To avoid the cost of early withdrawal penalties, account holders should always withdraw their funds or close the bank CD account at or after the maturity date.

The maturity date is the date on which this term ends and you can withdraw the principal amount from your deposit free of penalties. Any withdrawals or closures before the term may carry a fine or penalty. The CD early withdrawal penalty may be measured in months of interest, may be calculated to be equal to the institution’s current cost of replacing the money, or may use another formula.

Banks commonly mail a notice to CD holders shortly before a CD matures requesting directions on what the account holder would like to do with the maturing CD. The notice usually offers the choice of withdrawing the principal and accumulated interest or rolling it over or depositing the funds into a new CD. There is often a grace period given after the maturity date of the CD to change or close the account without penalty. In the absence of any directions to the bank, the bank will most likely roll the existing CD funds over into a new CD automatically with a new term.

When you close a bank CD you will usually have the option of having your funds deposited into an account of your choice. Account closure options often include having the balance mailed to you by check, wired to an account held at another financial institution, or transferred to a different bank account in your name at the same bank.

Most banks offer a number of different methods to close out a CD account. The options generally include a visit to the local bank branch to process a request to have the CD funds released, via fax request with authorization form to close the CD account from the bank and by phone to a bank representative. Some banks exclude phone request often because they are need of an authorized signature to process this type of request. In these cases, if the account holder is unable to visit a local bank branch, they can send the signed request to the branch where the account is held.

Any account CD closure requests should include the bank account number, the request to have the account closed, and instructions on where to send the balance of the CD with accrued interest.

It is essential to keep a tab on the date of maturity and the nature of any CDs held. The documents which were used to open the CD may come in handy when it comes time to close the CD and hence it is important to keep them safe. In addition, in case you would like to withdraw the amount before the maturity date, it is important to know of the withdrawal penalty.

For more information on the best CD rates by term refer to the following pages; 3 month CD rates, 6 month CD rates, 1 year CD rates, 2 year CD rates and 5 year CD rates.

To see a list of the best rates on CDs please refer to Best Rates on CDs.

Additional state specific CD rates can be found at California CD Rates, New York CD rates, Florida CD Rates, Illinois CD Rates, Pennsylvania CD Rates, Ohio CD Rates, Michigan CD Rates, Texas CD Rates.

How to Find the Highest 12 Month CD Rates

One year certificates of deposit are one of the best options for a risk free financial investment with a high rate of return. The one year or 12 month bank CD is one of the most popular term CDs and is offered at thousands of banks with a wide range of available interest rates. Before placing your money in the nearest bank CD, be sure you know how to find the highest 12 month CD rates to ensure you are obtaining best bank rates offered.

Prior to purchasing a CD, it is important to understand the particulars of your savings needs. By knowing your needs it is easier to compare bank CD features and bank services along with the CD interest rates.

Some of the most important factors to consider when evaluating CD investments are the term or date to maturity of the CD, the minimum deposit requirement and most importantly, the interest rate. Since you are shopping for a 12 month CD, the term is already determined. That leaves the CD rates and minimum deposit requirement to consider.

The minimum deposit requirement is dependent on the CD investor’s choice or limits. It is certainly not a good use of time to compare bank CD rates on CDs that have deposit requirement above your needs or ability. Therefore, to compare the highest 12 month CD rates you have to start with any CD that has minimum deposit requirement that is below your threshold.

Searching online for the best CD is definitely good option. Using an online bank rate comparison site is an efficient way to compare a number of top one year CD rates quickly and easily. These sites are setup where that data has already been compiled and presented for you. These sites can also tabulate the best CD rates data from financial institutions within your state or region as well as the best 12 month CD rates available nationwide.

Doing the math to compare the best 12 month CD rates is made easier by Federal Reserve regulations. Bank CD rates are quoted based on the APY of the CD. The Truth in Savings Act requires banks to disclose interest rates and fees based on the APY.

The APY is the return you would earn in an investment over a period of a year based on the interest rate with compounding. APY takes into account the effect of compounding; therefore, in order to receive the quoted APY, funds must remain on deposit for a full 365-day year.

Since you are searching for a 12 month CD this makes comparing all CDs with same 12 month term easy. Unless you are in need of additional bank services or features with the CD such as the rollover provisions at maturity, simply select the 12 month CD with the highest APY.

With all of the bank rate information already at your fingertips from a bank comparison web site, the next step is to determine which rates are the best offers. But it will be better if you call the financial institutions for the details and any up to date rate changes. The data obtained online can also be used to compare bank rates in your local market.

Learning how to find the highest 12 month CD rate before running to the nearest bank branch will save you from serious financial regrets.

For more information on the best CD rates by term refer to the following pages; 3 month CD rates, 6 month CD rates, 1 year CD rates, 2 year CD rates and 5 year CD rates.

To see a list of the best rates on CDs please refer to Best Rates on CDs.

Additional state specific CD rates can be found at California CD Rates, New York CD rates, Florida CD Rates, Illinois CD Rates, Pennsylvania CD Rates, Ohio CD Rates, Michigan CD Rates, Texas CD Rates.

Market Linked Bank CDs

A market link CD is a certificate of deposit with an interest rate determined by changes in an underlying index or common benchmark. The underlying index can cover almost any type of asset.

Market linked or market based bank CDs may include returns that are based on equity indexes, commodity indexes, foreign currencies or any number of other investment instruments or indexes. Market linked bank CDs allow investors to take advantage of potential appreciation of the reference assets, such as a basket of stocks or foreign currencies and more.

These bank CDs are not conventional CDs. The CDs rate of return is ascertained upon maturity and do not provide the account holders with a return or income stream prior to their maturity. The market kinked CD combines the long term growth potential of equity or other markets with the safety and security of a traditional certificate of deposit.

The principal invested in a market linked CDs is insured by the Federal Deposit Insurance Corporation up to applicable limits and is therefore protected from any market volatility. The principal protection assumes the CD is held to maturity and the insurance covers only the principal investment amount.

The CD maturities will vary with each bank offering, most market linked CDs are intermediate or long term CDs. Early redemptions form these types of CDs are typically not permitted and may result in a substantial loss of principal.

The interest rate earned on the CD is tied to an index. The interest payment to the depositor will vary depending on the terms of the specific CD. In general, the CD return is equal to the appreciation of the benchmark or index over the term of the CD with certain conditions. The conditions will vary depending on the terms of the CD but it is common for the returns to have caps that restrict the highest available rate of return regardless of how much the index my appreciate as well as floors that are in place restricting and principal reduction regardless of how much the index value may drop.

A market linked CD may yield a rate of return that is less than that of a traditional certificate of deposit or debt instrument of a comparable maturity. The return on a market linked CD can be calculated using several different methods, which is determined by the issuing financial institution.

With some market index CDs, you may earn only a percentage of the upside or downside of the index, this is referred to as the participation rate. A CD’s participation rate can be more or less that 100 percent. As an example, a market linked CD tied to commodity prices may have a participation rate of 80%. This means the CD return will be based, at least to some extent, on 80% of the return of the underlying commodity index. If the commodity index increases 10%, the CD return will be 8%.

There are at least two big risks associated with these bank CDs. The account holder may have an opportunity cost since the gains that can be obtained on these types of CDs are often limited by contract and can, of course, be zero. If the market based return with the CD ends up being less than could have been earned in a traditional fixed rate CD, there is an opportunity loss since that investor would have been better off with conventional interest bearing bank CD with a similar maturity.

In addition, the potential return of certain market linked CDs may be limited by a predetermined maximum return, a participation rate of less than 100% or other structure specific features.

With a market linked CD there is the possibility of earning zero interest or a minimum floor rate determined by the issuing bank. In this case, you only get the base rate of return the financial institution offered and it could very well end up being less than a more competitive, traditional CD. On the other side, if the market that the CD is linked to performs well, the CD account holder could end up with a higher profit than would have earned with a traditional bank CD.

Market linked bank CDs may fit in with certain an investor’s portfolio by providing diversification into different markets with some level of security. Market Linked CDs provide potential benefits beyond that of conventional CDs, as well as risks due to their distinctive market based return component.

What are Jumbo CDs

A jumbo certificate of deposit or jumbo CD is a certificate of deposit offered by a bank or credit union that has a large deposit requirement. Jumbo CDs usually have minimum deposit requirements of one hundred thousand dollars. The denomination or deposit requirement is the benchmark figure however; there are many banks that will offer jumbo CD rates at amounts below one hundred thousand dollars.

The threshold deposit requirement of one hundred thousand dollars was based on FDIC insurance limits. Prior to the most recent increase on FDIC insurance in 2008, to two hundred and fifty thousand dollars per account owner, the previous account limit was one hundred thousand dollars and thus bank CDs above one hundred thousand dollars were classified as a separate category of CDs or jumbo CDs.

With the prior cap of just one hundred thousand dollars, jumbo CDs had a larger market than they presently do since anything above the one hundred thousand dollars amount was not insured under FDIC coverage. The increase in the limit has reduced the need to segment jumbo CDs and non-jumbo CDs.

Jumbo CDs would often have CD interest rates that are higher than traditional CD rates.
Traditional CDs were covered by the FDIC and jumbo CDs were not entirely insured and therefore presented investors with a greater investment risk. The greater investment risk was compensated for with a higher yield or CD interest rate. After the increase in FDIC insurance coverage, jumbo CDs displayed rates that are near identical to non-jumbo denominated CDs.

Other than the denomination of the CD, jumbo CDs behave in a similar manner to a traditional bank CDs. Jumbo CDs, like standard bank CDs, typically offer a higher rate of return than comparable bank savings accounts such as money market accounts or savings accounts. The jumbo CD interest rate will be dependent on market interest rates and the term of the CD with longer term CDs generally yielding a higher interest rate than shorter term CD.

Like the standard certificate of deposit, jumbo CD accounts require the account holder to keep the deposit for the full term or penalties may apply for early withdrawal.

Jumbo CDs are often bought and sold by large institutional investors, including money market funds, pensions and other large investment fund operators. Large investors often need to hold sizeable positions in safe and secure short term investments, qualities that are available with jumbo CDs.

The term of the jumbo CD and the jumbo CD rate available will vary depending upon the financial institution offering the CD, the term and the amount of the deposit.

For more information on the best jumbo CD rates and traditional CD rates see jumbo CD rates or Best Rates on CDs.

What is a Fixed Interest Rate Bank CD

A fixed interest rate certificate of deposit or CD earns a fixed interest rate on the principal deposit for the full term of the CD. The fixed interest rate on the CD is determined at the time the CD is opened and remains in place until the CD reaches the date of maturity.

A certificate of deposit is a form of investment that functions like a savings account. The account holder invests money into the bank CD account and it earns interest. When a consumer purchases a bank CD, they agree to leave their money on deposit for a specific period of time, referred to as the CD term, in return the bank CD account holder receives a predetermined interest rate. The type of interest rate offered by the bank on the CD can be determined by a number of different means. The most common interest rate, accounting for the vast majority of all bank CDs held by consumers, is the fixed rate bank CD.

The fixed rate bank CD has an interest rate that will not change throughout the term of the CD. Bank CDs can also be offered with variable rates, in which the CD rate may change over time based on the change in an underlying index such as the one Treasury security. CD interest rates can be set to change at predetermined interval; this is the case with step up CDs that have a predetermined rate increase over time.

There are also CD rates that allow the account holder to change the rate at some point during the term should CD interest rates at the bank in which the CD is held increase during the change period. These CDs are generally referred to as bump up CDs. Additional bank CDs with other special interest rate features may also be promoted by banks from time to time.

With the fixed rate CD, the account holder will often have a number of options to choose from regarding how they want the interest earned on the account to be disbursed. Bank CD account holders can choose to have their monthly interest added to the balance of their CD to maximize compound interest, the interest earned can be deposited to another bank checking or savings account held with the financial institution that has the CD or the interest accrued can mailed to the account holder by check. Not all banks offer the same accrued interest distribution options.

There are a variety of benefits available with the fixed rate CD. As with all FDIC insured banks, a bank certificate of deposit offers the peace of mind provided by FDIC insurance. Each account holder’s principal and earned interest held with the bank are insured by the FDIC and backed by the full faith and credit of the U.S. Government to a maximum aggregate amount of $250,000.00 per depositor. By earning a fixed interest rate over the life of the CD, the bank CD account provides stability during uncertain times. With a variety of fixed rate CD terms to choose, investors have a wide choice to select a CD that meets their time horizon and financial needs.

Banks offer different fixed CD rates depending on a number of market forces impacting the bank such as prevailing interest rates on similar investments, competition from other banks, the individual banks financial needs and other inputs. The CD rates are established by each bank independently.

At any given time, consumers can find a wide selection of competitive fixed rate bank CDs with varying maturities among the 1000’s of banks in the U.S. Fixed rate CDs can be a very good savings or investment option for those individuals looking for predictable income or a way to grow their savings.

For more information on the best CD rates by term refer to the following pages; 3 month CD rates, 6 month CD rates, 1 year CD rates, 2 year CD rates and 5 year CD rates.

To see a list of the best rates on CDs please refer to Best Rates on CDs.

Additional state specific CD rates can be found at California CD Rates, New York CD rates, Florida CD Rates, Illinois CD Rates, Pennsylvania CD Rates, Ohio CD Rates, Michigan CD Rates, Texas CD Rates as well as other state specific CD rates.

What is a CD Rollover

A certificate of deposit or CD that is purchased through a bank generally has a fixed interest rate and fixed term. The term is simply the time until the CD reaches maturity and the principal amount invested in the CD becomes available to the account holder to use at their discretion without penalty. Once the bank CD reaches maturity or end of the term, many CD investors purchase another CD, this is a CD rollover. A CD rollover is when the funds from an expiring or maturing CD is invested into a new CD.

The principal from an expiring CD that is rolled into a new CD or can either be rolled into a new CD with the same bank or invested in a different bank with a new term and CD rate. When the CD rollover is placed into a new CD with the same bank the rollover can be completed with a new CD that has the same term at the prevailing interest rates with the bank or it can be rollover into a different term with the bank. .

CD rollovers at the same bank with the same term are frequently done automatically. Most banks have automatic rollover provisions in which the bank will rollover the CD within a certain number days following the expiration of an existing CD. Since bank CD rates change frequently, it is generally not a wise decision to let the CD rollover without comparing current CD interest rates among a number of different banks.

For bank customers that intend to have their CD rollover at their existing bank, inform the bank that you want to rollover the CD into a new one, once it reaches its maturity date since some banks will not pay interest during the grace period after the original maturity and before the new CD is opened.

It is important to keep track of when certificates of deposit are maturing so the account holder has time to explore all of their CD options as well as other investment options and decide whether they want to reinvest their available funds in another bank CD or use the money elsewhere.

For more information on the best CD rates by term please see; 3 month CD rates, 6 month CD rates, 1 year CD rates, 2 year CD rates and 5 year CD rates.

To see a list of the best rates on CDs please refer to Best Rates on CDs.

What is a Bank CD Renewal Policy

Bank certificates of deposit can be held for short periods of time, as short as seven days, long periods of time, up to several years, and most any time frame in between. But eventually the CD maturity date will arrive and the time to take action with the funds that become available will be at hand. Once the CD term is up, you must provide the bank with instructions to cash out the deposit upon maturity or it may be subject to the bank CD renewal policy.

The options for the funds that were originally placed in the bank CD that has now matured include at least three choices. The bank CD investor can take their funds from the bank, penalty free, for other investments or expenses, invest in a new bank CD with another bank or renew the CD with the existing bank.

In order to renew the CD with the existing bank, the CD investor should be aware of the bank CD renewal policies. Banks are required to notify the account holders before a CD matures regarding the bank CD renewal policies. Most banks have automatic renewal policies in place that may not be in the best interest of the account holder.

An automatic bank CD renewal policy informs the CD holder that the account will be automatically renewed at maturity into a new CD at the current CD rate for the same term. Although the account will automatically renew at maturity, the CD account holder will generally have a grace period of seven to ten business days after the maturity date to withdraw the funds without being charged a penalty. In addition, there is generally no CD interest earned during the grace period if funds are withdrawn during the grace period.

With an automatic renewal policy, if the account holder were to do nothing at the time the CD matures, the bank CD will be invested in a new CD at the same term at the current CD interest rate for that term. If you do not want your CD to automatically renew, you should notify the bank at least 10 days prior to the CD maturity. Since the best CD rates available change frequently from bank to bank it is often a wise decision to review your investment options and not let the CD fall into automatic renewal.

To understand the bank CD renewal policy, a good place to start is with the information provided by the bank on the terms and conditions document that was make available when the account is opened. If the bank CD has an automatic renewal policy, it should be stated clearly in the terms and conditions agreement. The automatic CD renewal times, rates and options should all be made clear for the account holder.

When opening a certificate of deposit account, the investor agrees to a specific investment term at a specific rate of interest, when it is time to renew their CD, you may want to change the deposit amount and the type of CD. Know the bank CD renewal policies to keep all your investment options available.

For more information on the best CD rates by term refer to the following pages; 3 month CD rates, 6 month CD rates, 1 year CD rates, 2 year CD rates and 5 year CD rates.

To see a list of the best rates on CDs please refer to Best Rates on CDs.

Additional state specific CD rates can be found at California CD Rates, New York CD rates, Florida CD Rates, Illinois CD Rates, Pennsylvania CD Rates, Ohio CD Rates, Michigan CD Rates, Texas CD Rates as well as other state specific CD rates.

What is the CD Maturity Date

A CD maturity date is the date when a bank CD term has comes to an end and the funds become available for the account holder. At the CD maturity date, the CD term ends and the CD principal and accrued interest can be withdrawn by the account holder without penalty or restrictions.

Certificates of deposit are offered by banks to investors or savers who agree to keep their money on deposit with the financial institution for a set period of time. The time period of the CD is the term which can range from a several days to several years. The end of the time period or term is the maturity date.

When the bank CD maturity date has been reached, the account holder will have the option to withdraw the funds, transfer to another account with the bank or renew the CD for new term.

The CD maturity date is important for several reasons. Bank CDs generally have an early withdrawal penalty imposed on account holders that withdraw the principal before the date of maturity. The advantage of bank CDs is they offer higher interest rate than is generally available on other bank savings products but the disadvantage is they offer less liquidity. The liquidity restriction is a result of the early withdrawal penalty that will be charged if the account holder withdraws their funds prior to the CD maturity date.

Banks will also often have automatically renewal polices that go into effect after the CD maturity date. Bank CD renewal policies provide the account holder a window of time to take their funds out of the CD on or after the CD maturity date or the CD will automatically be renewed for a new term. Most bank CD renewal policies usually cover a window of 10-15 days allowing the account holder time to decide what to do next before the CD will automatically renewed for a new term and new interest rate.

Finally, CD account holders should always be aware of the terms of their CDs as well as the CD interest rates as part of good financial management practices.

When CD maturity date approaches, the account should be aware of their investment options. These options should include an understanding of current CD interest rates at the bank in which the CD is held as well as with banks that may be offering the highest CD rates that match your time horizon. The options available at the time of the CD maturity should also involve knowledge of the banks renewal process. CD investors should know the banks renewal policy and be prepared to provide instructions if they don’t want their expiring CD funds rolled into a new CD.

For more information on the best CD rates by term refer to the following pages; 3 month CD rates, 6 month CD rates, 1 year CD rates, 2 year CD rates and 5 year CD rates.

To see a list of the best rates on CDs please refer to Best CD Rates.

Additional state specific CD rates can be found at California CD Rates, New York CD rates, Florida CD Rates, Illinois CD Rates, Pennsylvania CD Rates, Ohio CD Rates, Michigan CD Rates, Texas CD Rates as well as other state specific CD rates.

CD Early Withdrawal Penalties

Investing in bank CDs can offer a high rate of return with little risk when the account is held until it reaches maturity. However there are always certain risks associated with any investment options, including bank CDs. One such risk with CD investing is the risk of an early withdrawal penalty.

The early withdrawal penalty risk can arise with bank CD investments when the accounts are not held until the full term has been reached. When a CD holder redeems their CD prior the date of maturity they incur the risk of paying an early withdrawal penalty by the bank that issues the CD. The early withdrawal penalty is perhaps the biggest and chief pitfall of investing in bank CDs. Unlike checking accounts, savings accounts and money market accounts you are not allowed to withdraw money before the maturity of a CD without incurring a penalty or fee.

Federal regulations require that a minimum penalty of seven days interest is imposed on a bank CD account or time deposit for early withdrawal of the principal amount invested. The bank regulation does not mandate a maximum early withdrawal penalty amount and individual banks are free to establish a higher penalty. The CD early withdrawal penalty does not apply to withdrawal of interest earned on the account.

For any principal withdrawals from a bank CD made before the date of maturity, the account holder will have to shell out a few dollars as a penalty. There are exceptions to the early withdrawal penalty with the creation of exotic bank CDs that have terms allowing for penalty free withdrawals. These bank CDs are often referred to as liquid CDs or no penalty CDs.

The basis for the early withdrawal penalty is rooted in the higher interest rate that is offered on these bank accounts. Since the bank is offering the account holder a higher yield than is available on most other bank accounts, the bank offsets the costs with the security of knowing the funds will be available to the bank for a guaranteed period of time unless the account holder wants to incur the penalty to get access to their funds. The consumer receives the benefit of higher interest rates and the bank benefits from having a level of certainty about their available funds for lending and other financial activities on which the bank bases its profit.

The amount of early withdrawal penalty will vary from bank to bank. The amount of the early withdrawal penalty is generally based on a number of months in earned interest on the CD. Early withdrawal penalties may be three months of interest or several months, with a great deal of variation among the 1000’s of U.S banks. In addition, the early withdrawal penalty will generally increase as the term of the CD increases. A five year CD will often have a higher early withdrawal penalty than a one year CD.

For consumers searching for the best CDs and best CD rates, they should be careful to review all of the CD terms and conditions including any penalties for early withdrawal. Always find out how much you may have to pay should you decide to cash in your CD before the maturity date arrives.

For more information on the best CD rates by term refer to the following pages; 3 month CD rates, 6 month CD rates, 1 year CD rates, 2 year CD rates and 5 year CD rates.

Additional state specific CD rates can be found at California CD Rates, New York CD rates, Florida CD Rates, Illinois CD Rates, Pennsylvania CD Rates, Ohio CD Rates, Michigan CD Rates, Texas CD Rates as well as other state specific CD rates.

To see a list of the best rates on CDs please refer to Best CD Rates.

Certificate of Deposit Maturity and Redemption Time

A certificate of deposit or CD seems like a relatively straight forward investment option but there are some simple rules to remember to avoid problems and maximize your rate of return when it comes to the maturity date and time to redeem the CD.

A bank CD is an investment with a bank that involves a fixed amount of money invested for a fixed amount of time at a particular interest rate. Normally that interest is compounded daily until the date of maturity although some banks may compound the interest with less frequency. The maturity date is the date upon which the CD expires, and the account holder will then have to decide what to do with the invested funds.

If a bank CD investor invests $2000.00 in a bank CD with a term of six months on March 1, the maturity date will fall on the final day of August. The CD agreement with the bank or other financial institution will specify the exact date of maturity in the contract. Also specified in the CD account agreement is the manner in which the CD will be redeemed and how to notify the bank at the time of maturity.

For those CD investors that remember when Dad or Grandad owned a bank CD and at the time the CD maturity date arrived, the bank mailed back a check for the principal and interest earned unfortunately; this may not be the case today. Don’t assume that your new certificate of deposit will have the same terms as any other CD. The bank or other institution where a CD is purchased may mail you a check, send the funds by electronic transfer, hold the funds interest free until instructions arrive or have arrangements for some other form of distribution once the CD matures. Don’t assume the bank will deliver a check to you, read the terms for maturing CDs before drawing any conclusions.

The CD renewal terms will not only involve a variety of redemption options but it will also cover terms for renewal of the CD including a provision for automatic renewal. With the automatic renewal provision, once the bank CD matures, if the bank is not instructed to distribute the accumulated funds it will renew the CD for a new term at the current CD rate. The key component of the automatic renewal is that it calls for the CD to be automatically renewed at whatever the current CD interest rate is at the bank.

The automatic renewal after the CD maturity date would not be a good thing if the investor only wanted the money invested for a fixed period of time, at which point it would be used for some other purpose such as tuition, or a vacation. If it automatically rolls over into a new CD at a less than optimal CD interest rate, the investor is out of luck! A bank that offered the most competitive CD interest rate six months ago may be far from the best CD rate when that term expires.

These variations in the basic agreement are important to understand at the time of the investment. Some banks require 7 days notice prior to the maturity date and/or allow 7 days after the date of maturity before it automatically renews. Some banks will notify you that the date is drawing near, and some will not.

Whatever the case, it makes sense to have the terms form the local banker or other financial institution go over all of the pertinent details at the time of the CD investment. It is always wise to read the terms of the agreement on your own so that you know what is expected at the maturity date.

For more information on the best CD rates by term refer to the following pages; 3 month CD rates, 6 month CD rates, 1 year CD rates, 2 year CD rates and 5 year CD rates.

Additional state specific CD rates can be found at California CD Rates, New York CD rates, Florida CD Rates, Illinois CD Rates, Pennsylvania CD Rates, Ohio CD Rates, Michigan CD Rates, Texas CD Rates as well as other state specific CD rates.

To see a list of the best rates on CDs please refer to Best CD Rates.

Quick Bank CD Questions Before You Invest

There are many variations in the terms and conditions available with certificates of deposits. Bank CD terms and conditions can vary widely between banks and between CDs offered at a bank. CD differences can range from significant disparities such as a callable CD which can be paid off by the bank prior to maturity to subtle differences such as the time frame between the date to maturity and the time the CD will be automatically renewed. Without asking the right questions regarding a CD investment or asking enough questions, many CD investors own a certificate without being fully aware of all the attributes and features that comes with the CD they hold.

Clear problems with the failure to understand all of the bank CD features is unwanted surprises such as owning a high rate CD that has a call feature and is then subsequently called due by the bank or comparing dissimilar bank CDs that leads to an investor buying a CD that has lees than the best CD rate available.

Questions to ask before buying a bank CD should include:

What is the CD interest rate and how is it calculated? Banks and other financial institutions are required to express the CD interest rate as its Annual Percentage Yield (APY) to help consumers comparison shop similar term CDs quickly and easily.

Are they any special features or conditions present on the bank CD? Most investors that hold bank CDs are looking for fixed interest rate and fixed term CDs. Check to make sure the interest rate is fixed and if there are any special conditions such as a call feature or rate change option.

What is the term of the CD? A fundamental feature of the CD is the CD term or date to maturity. Comparing CD rates without focusing on the term or not comparing CDs with similar terms is a fruitless endeavor.

How is the interest earned paid out on the account? Is the interest paid monthly, quarterly, at maturity or some other time period. You may also want to know if the interest be deposited into another bank account, sent out as a separate check or simply held on deposit ion the CD account.

What is the penalty for early withdrawal of principal from the CD? The individual bank’s terms and conditions along with the length of maturity for the CD chosen will determine the amount of the early withdrawal penalty on the account.

Will the CD automatically renew at maturity if the funds are not withdrawn? Banks often automatically renew a maturing CD if the depositor doesn’t withdraw the money or set up a new account within a specified number of days. Ask what the time frame is and the how the renewal is handled.

Be sure to obtain answers to all these questions and any more that you may have before you turn over your hard earned savings for an extended holding period that is common with bank CDs. Banks are required to make available a “Truth in Savings” disclosure document that gives the terms of the CD before the investment is made. Read all the material regarding the CD before investing.

For more information on the best CD rates by term refer to the following pages; 3 month CD rates, 6 month CD rates, 1 year CD rates, 2 year CD rates and 5 year CD rates.

Additional state specific CD rates can be found at California CD Rates, New York CD rates, Florida CD Rates, Illinois CD Rates, Pennsylvania CD Rates, Ohio CD Rates, Michigan CD Rates, Texas CD Rates as well as other state specific CD rates.

To see a list of the best rates on CDs please refer to Best CD Rates.

How to Choose Between a Short Term CDs and Long Term CDs

Choosing the best bank CD involves more than just choosing the highest CD rate available. The best CD for an investor has to be one that matches their goals and investment time horizon. The best way to match an investment time horizon with a bank CD is by choosing the right CD term.
For many CD investors a key obstacle to find the right bank CD is deciding how to choose between a short term CD and a long term CD.

Because a bank CD account holder cannot typically withdraw their money before the CD matures without incurring an early withdrawal penalty, a potential CD buyer needs to determine the maximum length of time they are willing to invest. The first step in CD rate shopping should be deciding on a term or range of maturities that match their goals or needs. Choosing between a short term CD and long term CD can be complicated due to the term structure of interest rates and interest rate fluctuations.

The term structure of interest rates for bank CDs is the relationship between the CD interest rates for different term CDs. By reviewing the interest rate difference between short term CD rates and long term CD rates an investor can narrow down the range of terms that should be considered. Reviewing specific CD terms will help an investor find the right high rate CD that you are looking for to meet your savings goals.

Once an investor has reviewed the difference between CD rates over time, they should also consider possible future outcome of interest rates. Let’s say an investor is willing to buy a two year bank CD. If interest rates are low and there is an expectation that they will rise in the future, it may be wiser to invest in a shorter term CD and reinvest at a higher CD interest rate when the short term CD matures. If interest rates are high now and expected to fall, stretching out the CD term to hold on to the current high interest rates is the best option.

Some fundamental guidelines to follow when choosing the term of a CD include: Review your investment time horizon and the maximum length of time you are willing to leave the funds invested in bank CD. Compare the best CD rates available for the term or time range considered in your investment horizon. Evaluate if interest rates are expected to rise in the near future and then consider choosing a shorter term CD within your time horizon or if interest rates are expected to fall or even remain stable, consider choosing a longer term CD within your time horizon.

The interest rate spread between the CD rates of short term CDs and long term CDs can sometimes makes it difficult to decide between a short term and long term CD. In order to choose between a short term bank CD and a long term bank CD it is essential to examine the current interest rate market or term structure of interest rates, your investment time horizon, the expected change in interest rates over time and then compare the best CD rates available within that time frame.

For more information on the best CD rates by term refer to the following pages; 3 month CD rates, 6 month CD rates, 1 year CD rates, 2 year CD rates and 5 year CD rates.

Additional state specific CD rates can be found at California CD Rates, New York CD rates, Florida CD Rates, Illinois CD Rates, Pennsylvania CD Rates, Ohio CD Rates, Michigan CD Rates, Texas CD Rates as well as other state specific CD rates.

How to Compare CD Rates in Texas

Certificates of deposit are bank investment accounts that have a fixed time period and usually earn a fixed interest rate. Bank CD rates are established independently by different banks across the country. CD interest rates in Texas vary considerably among the different banks in the state as well as with out of state banks that offer bank CD accounts to Texas residents through online banking. Residents of Texas searching for the best CD rates need to know how to compare CD rates in Texas in order to find the highest CD rates to fit their needs

Finding the best CD rates in Texas requires the prospective CD investor to compare CD rates in Texas from a variety of financial institutions, not just local banks. Bank CDs can be purchased quickly and easily from local banks but can also be obtained through online banking at out of state banks or online only banking institutions. Whatever mode you may choose, comparing the CD interest rates is an essential step towards making the best CD investment.

Online bank rate comparison sites such as selectcdrates.com are a good starting point to find the best CD rates within a region or by state. With the resources found on the online bank rate comparison sites, a bank CD shopper can compare the CD rates in Texas with Texas banks as well as quickly compare those CD rates to the best national CD rates or other states. The CD rates in Texas can be searched by regions within the state to quickly identify bank CD rates in Texas that are easily accessible from those banks that may not offer online banking and are only available clear across the state.

Comparing the CD rates in Texas with the online comparison site allows the CD shopper to get the details on different types of CDs offered, the CD interest rates, interest and term or time to maturity. Texas CD rate shoppers can also get the details of the minimum amount needed to open the bank CD.

When comparing CD rates by region, be sure to choose the term of the CD that meets your investment time horizon. There is no point in reviewing the highest CD rate only to find out it has five year term when you will need access to the funds earlier. Review the conditions to open the CD account with an eye on the minimum deposit requirement to make sure it is within the range of your savings allotment.

Bank CD interest rates are generally higher than other bank savings products such as savings accounts and money market accounts but still provide safety and security through FDIC insurance coverage, making these savings accounts a good choice for wide range of savers and investors. The FDIC insurance coverage makes it easier to compare banks that are out of the immediate geographic area of the CD rate shopper, as long as the bank is FDIC insured the individual CD account will protected for the maximum allowable amount per account regardless of where the bank is located.

The final step is to choose the bank which is offering the highest interest rate for the particular CD term that meets your goal.

As a final step, always double check the CD rates and terms offered by the bank. Don’t take the condensed data about the bank rates and services for granted. Call the customer service personnel of the bank and be sure to ask about the details and confirm the CD and savings options before you proceed. This will save your time and energy in the process of saving money. Learning how to compare CD rates in Texas can turn into a very rewarding experience.

For more information on CD rates in Texas see Texas CD rates

For more information on the best CD rates by term refer to the following pages; 3 month CD rates, 6 month CD rates, 1 year CD rates, 2 year CD rates and 5 year CD rates.

Additional state specific CD rates can be found at California CD Rates, New York CD rates, Florida CD Rates, Illinois CD Rates, Pennsylvania CD Rates, Ohio CD Rates, Michigan CD Rates as well as other states.

To find information on mortgage rates in Texas see Texas Mortgage Rates.

What are the Different Types of Bank CDs

A certificate of deposit is a risk free form of investment in which the account holder agrees to keep a fixed sum of money at the bank for a fixed period of time. The bank in turn, offers an agreed upon interest rate based on the term, the amount deposited and the type of CD. Bank CD’s are a good option for investors and savers that want a safe and secure investment that offers a reasonable rate of return. While most investors and savers are familiar with the traditional bank CD, there are several different types of Bank CDs available with a variety features.

The traditional fixed tern and fixed interest rate CD’s are the most popular types of bank CDs. With these CDs, the account holder makes a deposit of a certain sum of money for a certain period after which the account holder receives a fixed interest amount at periodic intervals. When the CD matures, it can either be withdrawn or renewed for another term. Penalties are imposed for early withdrawals before the maturity date of the CD.

While most bank CDs are fixed term and fixed interest rate accounts, some CDs are available with variable rates. A variable rate CD has an interest rate that can adjust over the term of the CD. The interest rate adjustments or rate changes are tied to a market index such as a one year Treasury bill. The CD interest rate will change with the interest rate on the index, one year Treasury bill rate in this case, at predetermined times such as the first of the month. The CD interest rate on variable rate CDs is almost always lower than a comparable term fixed interest rate CD at the onset of the account, but these bank CDs allow for some upside potential should interest rates increase substantially over the term of the CD.

A liquid CD is a bank CD that allows for an early withdrawal of principal without penalty. Liquid CDs have preset lock in periods in which the funds may or may not be withdrawn from the CD without penalty. There can be limits on the number and amount of the withdrawals during the CD term. The law requires the deposits to be kept in the CD for a minimum of seven days before the banks can allow the customers to withdraw money without penalty. The CD interest rates on these accounts are generally lower than traditional CD rates. Liquid CDs are also referred to as no penalty CDs.

Bump up CDs and step up CDs are very similar bank CD options. A bump up CD allows the account holder the ability to increase the interest rate on their CD if interest rates rise during the term of the CD. Bump up CD holders that want to revise the interest rate on the CD before the maturity will have a window of time in which the bump up request can be made. The time period when the bump up request can be made and the amount of the CD rate increase will be dependent on the terms established by the bank. The rate increase is usually is based on rates on a similar term CD at the time of bump up. The bump up option is often limited to only one time during the CD term

A step up CD also has an increasing rate feature but the rate increase is preset as opposed to an option like that of the bump up CD. The step up has a fixed interest rate for a set period of time, such as one year, after which the CD rate automatically increases to a predetermined higher interest rate.

A zero coupon CD is a bank CD that has no interest payments. These bank CDs are purchased at a deep discount to the maturity value of the CD, referred to as the par value in bonds. The investment return to the CD account holder is based on the difference between the discounted purchase price of the CD and principal returned at maturity. The term zero coupon stems from the fact that there are zero interest payments made by the bank, they entire return is based on the purchase price of the CD and the maturity value.

Callable CDs are generally long term CDs that operate like traditional CDs with a fixed interest rate and fixed term however, these bank CDs also have a call feature. The call feature allows the bank to call back the CD after a predetermined period of time referred to as the call date or call protection period but before the actual CD maturity date. The banks pay the principal and the interest earned on the CD up to the call date. These bank CDs generally offer a slightly higher interest rate than a comparable CD without the call feature. The distinct disadvantage of a callable CD is that the bank is more likely to exercise their right to call in the CD, or buy the CD back for the account holder, when interest rates drop. This allows the bank to replace the high rate CD with a new issue at a lower rate but leaves the account holder searching for a new place to invest their money when interest rates are now lower.

A jumbo CD is a bank CD with a large denomination. Jumbo CDs are usually sold with a minimum investment of $100,000.00. Jumbo CDs are commonly bought by large institutional investors, such as mutual funds and pension funds but are also purchases by individual investors. A jumbo CD has the same basic characteristics as a traditional certificate of deposit. Historically, the rate on a jumbo CD was higher than a traditional CD however in recent years the interest rate differential between jumbo CDs and non jumbo amounts are almost inconsequential.

For more information on the best CD rates by term refer to the following pages; 3 month CD rates, 6 month CD rates, 1 year CD rates, 2 year CD rates and 5 year CD rates.

State specific CD rates can be found at California CD Rates, Texas CD rates, New York CD rates, Florida CD Rates, Illinois CD Rates, Pennsylvania CD Rates, Ohio CD Rates, Michigan CD Rates as well as other states.

For more information on today’s best rates on CDs see Best Rates on CDs.

Callable Certificates of Deposit

A callable certificate of deposit is a bank CD that can redeemed by the bank prior to the scheduled date of maturity. Certificates of deposit with call features can present an unwelcome surprise for CD buyers who were not prepared to own a bank CD with this characteristic. Fortunately, callable certificates of deposit are not too common, the vast majority of bank CDs owned by individual investors do not have call features.

Callable CDs are similar to traditional bank CDs with the exception of a call feature that is included in the CD agreement. The call feature gives the issuing bank the right to redeem or call the CD before maturity at their discretion. If the bank calls the CD, the account holder will receive the full amount of the CD deposit plus any unpaid and accrued interest earned.

The right to redeem the CD or call it due is the right expressly given to the issuing bank and is not right bestowed on the owner of the CD. The added risk with callable CDs is that if interest rates should fall during the term of the CD, the issuing bank may call the CD and leave the investor with their funds intact but unable to invest at the same rate as the called CD.

Since there is an added layer of risk with a callable CD, these CDs often offer a slightly higher CD interest rate than comparable term CDs without a call option.

Callable CDs will generally have an explicit time period in which the bank cannot call the CD, this usually cover the first few months of CD term. The time period in which the bank can call the CD is the call period or callable date. The call date should be confused with the maturity date. The maturity is date when the term of the CD expires and the call date is simply the starting time period in which the bank can call the CD. A two year callable CD simply tells the call date the full term of the CD.

Callable CDs adds risk to the investor if interest rates should fall during the term of the CD since it is more likely the bank will call or redeem the CD. In addition, the more common risk of rising interest rates is also present; if market interest rates rise the CD will most likely not be called and the holder will have to keep the CD for a long period of time while market interest rates make current CD interest rates higher.

Investors that are searching for greater investment yields with some added risk may consider a callable certificate of deposit a viable option. These bank CDs will have somewhat higher returns than regular CDs and are FDIC insured. Before investing in a bank CD with a call feature, compare a variety of bank CD rates to see if the additional risk is worth the return.

For more information on the best CD rates by term refer to the following pages; 3 month CD rates, 6 month CD rates, 1 year CD rates, 2 year CD rates and 5 year CD rates.

State specific CD rates can be found at California CD Rates, Texas CD rates, New York CD rates, Florida CD Rates, Illinois CD Rates, Pennsylvania CD Rates, Ohio CD Rates, Michigan CD Rates as well as other states.

For more information on today’s best rates on CDs see Best Rates on CDs.

Common Mistakes Buying Bank CDs

Bank certificates of deposit accounts are a type of saving account that is virtually risk free. Bank CD accounts are insured by the FDIC which protects the principal invested in a CD up to a maximum limit per account holder. However, like any investment account, along with the benefits there can be hazards with bank CD investing. The biggest hazards with bank CD accounts are simple CD buyer mistakes in understanding what they are purchasing.

One of the most common bank CD buying mistakes is buying a CD with a term or date to maturity that is too long based on the investor’s time horizon. Since most bank CDs are fixed term and fixed interest rate investments, a longer term CD is fortunately, not subject to the risk of fluctuating principal investments. But, a long term CD is not a liquid investment and if the investor with a long term CD wants access to their funds prior to the maturity they will be subject to an early withdrawal penalty.

It is important that every bank CD investor understands the importance of the term of the CD or maturity date. The CD account agreement states that the money deposited in the CD remains in the CD throughout the term of the agreed time period. A bank CD account holder that wants to cash in their CD prior to the maturity can lose up to 6 months of interest payments that would have been earned on the CD as an early withdrawal penalty.

Some investors make the mistake of unwittingly investing in a CD with a call feature. Callable CDs work just like a standard bank CDs, however the issuer of this kind of CD has a call option which gives it the right to redeem or call the CD from the account holder for the full amount before the maturity date. The right to call the CD belongs to the issuer or bank and not the account holder.

A callable CD will usually be called when interest rates fall allowing the issuer to call the high rate CD and issue a new CD or borrow money for less than it’s paying on the CD it has called. This leaves the account holder that had the CD called forced to find a new place to invest their money, which will usually be at a lower interest rate.

A third common mistake made when buying bank CDs is not thoroughly comparing CD rates.
Certificate of deposit accounts usually have a higher interest rate than other savings instruments and CD investors have tendency to view the local bank CD rates comparing the options with just that bank or only other local banks. By not comparing bank CD rates in a wider region, investors are receiving far less than the highest CD rate that may be available. Before investing in CD with any bank, potential CD buyers should compare the best CD rates in their area as well as the highest national CD rates.

A final mistake with bank CD purchases is not understanding all of the terms and conditions with the bank CD. CD buyers need to know the minimum deposit requirement needed to obtain the posted CD interest rates, the penalty for early withdrawal, whether the CD account is a fixed rate and fixed term account and the renewal policies of the bank. It is a crucial step to take note and understand all the terms and conditions to avoid any mistakes investing in certificate of deposit account.

When you invest in any bank product there will be some risks no matter how small. Before putting your hard earned dollars in a new bank account, read and understand the terms of the bank product and compare the bank rates to insure you receive not only a safe and secure investment but the best return that is available.

State specific CD rates can be found at California CD Rates, Texas CD rates, New York CD rates, Florida CD Rates, Illinois CD Rates, Pennsylvania CD Rates, Ohio CD Rates, Michigan CD Rates as well as other states.

For more information on today’s best rates on CDs see Best Rates on CDs.

Comparing CD Rates

Certificates of deposit are low risk investments which allow account holder to obtain higher interest rates than comparable guaranteed fixed interest rate investments. Bank CDs can be one of the best tools to achieve financial stability and maintain a diversified investment base. Before buying a bank CD, prospective investors need to compare the CD interest rates offered to maximize the rate of return on their investment.

Although certificates of deposit from one bank are effectively indistinguishable from a certificate of deposit from another bank, wide variations in CD rates will exist between the CDs offered by different banks.

CD rates may vary significantly from bank to bank due to a variety of factors. Banks in the U.S. have different sources of funding needs that are filled by the bank through a number of sources including CD deposits. Different banks will have different funding needs and possibly different costs structures leading to different interest rates paid on depositor funds. Hence, different CD rates at different banks.

Regardless of the bank offering the CD, a bank CD can be a versatile form of investment the buyer which offers a fixed interest rate on the deposit that will be held by the bank for a fixed term. On maturity, CD depositors can choose to withdraw their funds or renew the bank CD for a fresh term at the prevailing CD rates offered by the bank. A bank CD holder may have to shell out a few dollars as penalty to withdraw money from CD if they want access to the funds before the maturity period.

Since the banks are the holders of the deposited money for the full term of the CD, unless the account holder wants to incur a penalty fee for early withdrawal, bank CDs will usually earn higher interests than savings accounts, money market accounts and comparable short term investment products.

To start the process of comparing bank CD rates, consumer should compare and analyze the CD interest rates among similar term CDs as well as the rates over different terms to evaluate the overall level of bank rates. In general, bank CDs accrue more interest when the term is longer. The difference between CD rates among varying terms is the yield curve. The CD rate yield curve may be steep when long term CD rates are significantly higher than short term CD rates or narrow when the difference long term and short term CD rates is not very wide.

Online CD comparison tools are available to help an investor choose the best bank CD option. Online web sites such as www.selectcdrates.com list the highest CD rates that may be available nationally as well as the highest CD rates by state. The best CD rate to meet your needs may be at the neighborhood bank or may be through an online only bank. Shop and compare CD interest rate thoroughly before investing your money.

For more information on the best CD rates by term refer to the following pages; 3 month CD rates, 6 month CD rates, 1 year CD rates, 2 year CD rates and 5 year CD rates.

State specific CD rates can be found at California CD Rates, Texas CD rates, New York CD rates, Florida CD Rates, Illinois CD Rates, Pennsylvania CD Rates, Ohio CD Rates, Michigan CD Rates as well as other states.

For more information on today’s best rates on CDs see Best Rates on CDs.

Understanding the Certificate of Deposit Term

A certificate of deposit is an investment vehicle with a fixed time period that may be offered by a bank, savings bank or credit union. Certificates of deposit require the investor to deposit a fixed sum of money for fixed period of time with the bank or credit union. The length of time the deposit must be held in the CD is the CD term. The CD term is also referred to as the maturity date.

Certificates of deposits generally have a fixed interest rate as well a fixed term but some CDs have variable rates and rates that change at predetermined periods of time, however all CDs have a set term to maturity. A key characteristic of a bank CD is that fixed term.

Certificates of deposit come with a variety of terms that can range from a few days to several years. The individual that opens the CD will receive the agreed upon interest rate from the bank for the full term of the CD or up to the CD maturity date. Common CD terms are three month CDs, six month CDs, one year CDs, two year CDs and five year CDs although the CD can be any time period that is agreed upon by the issuing bank and the CD account holder.

As simple as this sounds, understanding and choosing the maturity date for a bank CD is one of the most critical choices regarding CD investments. Although there are a number of advantages to bank CDs one of the biggest drawbacks to a bank CD is that most all banks and financial institutions will impose a penalty if you redeem a certificate of deposit prior to its maturity date. The penalty for accessing the funds prior to the maturity date is referred to as an early withdrawal penalty. The early withdrawal penalty is usually the forfeiture of one or more months’ of interest.

When a CD does reach maturity, the account holder can decide what they want to do with the invested principal and accrued interest. The account holder can take the money and move on to another investment or spend it as they see fit or they can have the CD rollover which reinvests the money in another CD with the same bank for the same term at the prevailing CD rate for that term.

If the account holder does not inform the bank on what to do with the expiring CD, most banks have provisions to automatically rollover the CD after a certain number of days have gone by after the original maturity date has been reached. If the CD interest rate at that bank is no longer competitive or you need the funds for other investments or activities, the automatic rollover may be an unwelcome surprise.

Certificates of deposit interest rates generally rise with the length of the CD term. A two year certificate of deposit will, during normal interest rate environments, generate a higher rate than a three month CD. CD interest rates will vary with the term of the CD as well as between the banks that offer CDs.

Before you purchase a new bank CD, make sure you fully understand the CD term and the penalties that may be imposed for early withdrawal. If you are considering a CD with an extended maturity date of a few years or longer, think carefully about the amount of funds you are allocating to the CD purchase. While the longer term bank CDs usually pay the highest CD rates, they also require investors to lock their money up for a longer period of time. Longer term CDs are less liquid by not allowing the investor access to the funds for a prolonged period of time without incurring a prepayment penalty as well the risk that market rates will increase while the CD awaits maturity.

For more information on the best CD rates by term refer to the following pages; 3 month CD rates, 6 month CD rates, 1 year CD rates, 2 year CD rates and 5 year CD rates.

State specific CD rates can be found at California CD Rates, Texas CD rates, New York CD rates, Florida CD Rates, Illinois CD Rates, Pennsylvania CD Rates, Ohio CD Rates, Michigan CD Rates as well as other states.

For more information on the today’s best rates on CDs see Best Rates on CDs.

Advantages of Bank CDs

Bank certificates of deposit are one the safest financial choices for long term financial investments and offer many advantages the CD account holder. Bank CDs yield higher rates of return when compared to the conventional savings accounts, checking accounts and comparable secure investment choices.

A bank CD is one of the least risky investments in terms of the security of the invested capital. One of the main advantages of bank CDs is they are insured by the FDIC. Federal Deposit Insurance Corporation (FDIC) provides an insurance cover of up to $250,000.00 per person per bank for each type of investment.

Once the safety and security of the CD investment is evaluated, investors will find that bank CDs generally yield a higher interest rate when compared to other forms of investment with similar terms and levels of security. When compared to bank savings accounts, money market accounts and Treasury bills and bonds, CD rates are often the highest among these investment choices.

With a bank CD, the investor can choose the amount of money to invest as well as the length of time they wish to invest the money for. A conventional bank CD has a fixed interest rate and fixed term which provides peace of mind to the CD investor since they will know exactly how long their money is invested for as well as the rate of return that will be provided on the investment. The bank CD investment is therefore immune to the ups and downs of equity investments and bonds.

Bank CDs come with a variety of interest rates, terms and deposit requirements. An advantage of bank CDs includes the wide selection available and the low minimum deposit requirements that are often available. Some bank CDs will have significant minimum deposit requirement but the vast majority of bank CDs can be opened with $1,000.00 investment or less, with some bank CDs available for as little as $100.00.

The ability to choose the term of the bank CD is an advantage that provides flexibility and liquidity options for your investment. A CD investor can even stagger the maturity dates of their CD investments and always have access to their money when they need it. This flexibility has made certificates of deposit popular among young investors as well as older investors.

Bank CDs can be found at a number of banks from traditional community banks to big money center banks as well as through online banking. The broad array of choices for where an investor can purchase a bank CD provides a wider range of investment choices as well as greater opportunities to make the investments.

Bank CD investments can be made by any investor. There are 1000’s of banks in the U.S. that offer CDs with a wide range of terms and CD interest rates. It may take a little time to find the best CD rate that fits your investment needs but finding the best CD rate does not require an investment advisor or broker, the consumer can shop and compare CD rates on their own and invest without paying a fee or commission.

Bank CDs can be a very safe and an effective way to save money. Before investing in a bank CD make sure to understand all the terms and conditions that come with the bank CD. The time invested to compare and secure the best bank CD rates is the first step to obtaining some of the many advantages of bank CDs.

For more information on the best CD rates by term refer to the following pages; 3 month CD rates, 6 month CD rates, 1 year CD rates, 2 year CD rates and 5 year CD rates. State specific CD rates can be found at California CD Rates, Texas CD rates, New York CD rates, Florida CD Rates, Illinois CD Rates, Pennsylvania CD Rates, Ohio CD Rates, Michigan CD Rates as well as other states.

How to Buy a Bank CD

Certificates of deposit are financial investments with banks that yield high rates of returns while carrying very little financial risk. It is easy for a consumer to buy a bank CD but it is important to make sure that you are buying the right bank CD from the right financial institution to fit your needs.

When a consumer buys a bank CD, they are invest a fixed amount of money for fixed term or period of time and, in exchange, the bank that issues the CD pays a predetermined rate of interest

The first basic step in achieving financial success with a bank CD is to set a financial target. Bank CDs are generally purchased as investments to meet long term goals. However, bank CDs can be purchased with short terms or maturities to meet shorter term financial goals and obtain greater liquidity. When the time comes to buy a bank CD, prospective CD investors will find that most banks offer CDs with a variety of terms from as short as a few days to several years.

Before pressing forward to buy a bank CD at the local bank, first shop and compare the different types of bank CDs and CD rates. There are several different types of bank CDs a consumer can choose from. Most bank CDs are offered with a fixed interest rate and a fixed term. Bank CDs are also available with variable interest rates. Bank CDs may also have provisions where the CD interest rate will rise if interest rates change during a predetermined period. Changing rate CDs are often referred to step up CDs or bump up CDs. Some CDs are offered with an optional call feature. The banks are at an advantage with this feature since they can call back the CDs and return the principal invested tom the CD account holder if the interest rates have dipped in the market. CDs can also be obtained with no prepayment penalties; these are often referred to as liquid CDs.

The term of a CD should be selected based on your investment goals. If you plan to reinvest the money then it will be better to select a longer term which will yield you more interest. On the other hand if you are planning and saving for a purchase in near future, it will be wise to go for a shorter term. By buying a bank CD you are agreeing to keep the money locked for the term with the possibly of a penalty if you need to funds before the term expires.

One of the key features to look for in buying a CD, regardless of the type of CD, is the CD interest rate. When comparing CD interest rates, be sure you’re looking at the “Annual Percentage Yield” (APY), a uniform calculation method required by federal regulations to help consumers comparison shop among interest bearing financial products.

Once you decide to buy a CD, the CD purchase decision may often decide on how you want to buy the CD. Although most individuals purchase CDs directly from banks in person, many brokerage firms and independent salespeople also offer CDs. Individual entities that sell CDs are known as deposit brokers. Buying a CD directly from a bank requires very little time and can be completed at the local bank branch as well as online or over the phone with some banks. Information about the identity and address of the account holder is needed along with a manner of funding the new bank CD account.

Shop around for the best CD rates and features that match your needs. When making CD rate comparisons, be sure to investigate local banks in your neighborhood along with banks in other states. Also check out the highest CD rates offered by online banks. Searching for the best CD interest rates may take a little bit of effort but the added research could result in substantially better yields.

Before purchasing a CD from a bank or a broker, shop around for the best combination of CD interest rates, minimum deposit requirements, term or maturity date, and early withdrawal penalties. When you buy the bank CD make sure that bank CDs is with an FDIC insured institution.

Once the decision to buy a bank CD is made pay attention to the terms to ensure that the particular CD makes sense in terms of your financial goals, your tolerance for risk, and your willingness to commit money to a long-term deposit. Make sure that you understand the CD’s features and that you feel comfortable with the investment before you agree to the new investment.

For more information on the best CD rates by term refer to the following pages; 3 month CD rates, 6 month CD rates, 1 year CD rates, 2 year CD rates and 5 year CD rates. State specific CD rates can be found at California CD Rates, Texas CD rates, New York CD rates, Florida CD Rates, Illinois CD Rates, Pennsylvania CD Rates, Ohio CD Rates, Michigan CD Rates as well as other states.

Disadvantages of Bank CDs

There is no doubt that certificates of deposit are one of the more stable investments choices that are readily accessible by most investors. A bank CD is a time deposit that is available from local community banks, big money center banks as well as online banks. There are many advantages to holding bank CDs but, there are disadvantages with bank CDs.

Bank CDs can provide a fixed interest rate and fixed rate of return for the account holder. Bank CDs come with a government guarantee on the principal invested in the form of FDIC insurance. Even though certificates of deposit provide a secure and known rate of return for your investment, bank CDs do have a few drawbacks. Knowing these limitations or disadvantages with bank CDs will help savers and investors make better financial decisions on deposits and future investments in CDs.

The main disadvantage of bank CDs is there limited liquidity. Investments in a CD are locked in for the full term or maturity of the CD. The primary reason bank CDs pay higher interest rates over other bank products is the fixed term the CD that is a key feature in this investment. The CD investor has to leave their money in the account for the full term of the CD. Any withdrawal before the maturity date involves an early withdrawal penalty. Usually banks charge higher penalties the longer the CD term, thus bank CDs are illiquid accounts especially the longer the term on the account.

Another disadvantage of a bank CD is the relatively low rate of return compared to other available investments. Bank CDs frequently pay higher yields that similar safe and secure investment options, but compared to a wider range of investment options, CD rates are often not the top performers. Because the risk level is relatively low, your reward might also be relatively low.

A third disadvantage of bank CDs is the opportunity cost of long term, fixed term investments. With long term CD investments, account holders run the risk of marketplace interest rates changing during the CDs term. When interest rates rise while your CD is locked into a CD interest rate that is less than the prevailing rates, there is a significant opportunity cost. The opportunity cost is the loss the CD investor has since they are unable to invest in higher interest rates while their funds are locked into an existing lower interest rate CD. Of course, if prevailing interest rates were to decline, your CD interest rate would look even better and become an advantage with this investment.

While there are certain disadvantages with bank CDs, CD investment also have numerous advantages that make them a viable investment choice for numerous savers and investors.

For more information on the best CD rates by term refer to the following pages; 3 month CD rates, 6 month CD rates, 1 year CD rates, 2 year CD rates and 5 year CD rates.

How to Calculate a CD Interest Rate

Shopping and comparing different bank CDs and CD rates is important task before opening a new bank CD account. To thoroughly compare bank CD rates, an account holder needs to understand the CD yield and CD interest rates. Understanding how to calculate the CD interest rates can be an important task when comparing different bank CDs and CD rates.

Comparing the CD interest rates and reviewing the different CD options should be accomplished before making your CD investment choice. However, this is not an easy undertaking. A little financial knowledge will help you make a good financial decision and obtain a good rate of return for your earnings.

The principal amount of the CD account is the amount you plan to invest in the CD. The CD investment amount will need to be higher than or equal to the minimum deposit needed to open the account at the bank of your choice.

Bank CDs are designed to be held for a fixed period of time, this fixed period is the term of the CD or the duration for which you intend to keep the money in the CD. It can be anywhere from a few days to several years. The principal is to be kept in the CD until the date of maturity of CD in order to avoid an early withdrawal penalty. Withdrawal or refunds within the term will be subject to a penalty.

Most all bank CDs accrue compound interest. Simple interest or the stated interest rate on a bank CD assumes no compounding and is calculated on a yearly basis. Compound interest means that once your principal earns some interest, the next interest is calculated on the principal amount plus interest previously earned. So even with similar fixed interest rates, you will be earning more interest if the compounding period is higher on one bank CD as compared to another. Generally speaking, if the frequency of compounding is higher, the more accrued interest there will be on the bank CD.

The accumulated interest of the CD can be calculated with ease if the interest is simple interest or compound interest. For this, you have to know the simple interest rates often referred to as just the interest rate and the frequency of compounding. CD interest can be calculated on a daily, monthly or annual basis.

Simple interest earned on your capital invested in a bank CD can be computed as follows:

Balance after N number of years = P * (1+R * N)
P = Principal
R = nominal interest rate
N = term of CD in number of years

For a $1000.00 bank CD with an APY of 5 % and term of 1 year the total amount in the account at maturity will bee

1000 * (1+ (5/100*1)) = 1050.

If you choose the term as half a year, the interest you earn will be the half of annual interest. For e.g.; you will receive an amount of $1025.00 at the time of maturity after six months.

The general formula to compute the APY on bank CD with compounding is as follows:

I = P*(1+R/N)^(N*T) – P
I – Interest or accrued interest
P – Principal
R – Interest rate
N – Frequency of compounding per year
and T – Term of the CD

For example, for a CD of $1000.00 with a 5% interest rates and monthly compounding, a term of 36 months will yield
I = 1000*(1 + (.05/12))^(12*3) – 1000 = $161.47

Once you have collected adequate data on different CD interest rates and bank CD terms, do the calculations to find out the best CD yields for the CD term that matches your investment needs and investment time horizon.

For more information on the best CD rates by term refer to the following pages; 3 month CD rates, 6 month CD rates, 1 year CD rates, 2 year CD rates and 5 year CD rates.

How to Choose the Best Term for a Bank CD

A certificate of deposit is a financial instrument for savings referred to as a time deposit that is offered by banks, savings banks and credit unions. A certificate of deposit is essentially an agreement between you and the financial institution that covers a specific deposit amount, a time period and an interest rate that will paid on the account. A key component of a certificate of deposit or CD is the period of time that the account remains active at the bank or financial institution. The amount of time that the account remains open is the term of the CD. The term for a CD is nothing more than the duration for which you agree to keep your money at the bank’s disposal.

The term of a bank CD can range from a few days to ten years or longer. With a bank CD, the account holder will normally be assessed a penalty if they withdraw their funds from the CD prior to the expiration of the term. In exchange for this agreement to keep the money on deposit for the term of the CD, banks and other financial institutions that offer the CD usually pay higher interest rates than they do on other savings accounts in which the account holder can withdraw their funds at anytime.

The agreement to keep the money deposited in the CD without being able to withdraw the funds without a penalty also leads to longer term CDs earning higher interest rates than shorter term CDs. A longer term bank CD will almost always earn a higher interest rate than a shorter term CD unless comparable term interest rates in the market are inverted or when longer term interest rates are at or below short term interest rates.

A bank CD investor can get the best interest rate for their needs when they choose to invest in a CD wisely. A short term CD is advised for those who want to get returns fast, need faster access to their invested funds or simply believe that interest rates may be headed higher. However, a short term CD and a savings account will essentially yield similar returns. When investing in short term CDs it is prudent to compare similar savings options to earn the best rate of return available. Note that savings accounts and money market accounts often pay interest as variable rates and therefore the rate of return may change over time whereas most bank CDs pay a fixed interest rate for the term of the CD. Compare the interest rates for the different options for bank CDs, but also compare the available savings accounts or money market account interest rates available.

Long term bank CDs have longer terms of maturity which generally offer higher CD interest rates. With these higher CD rates, it is natural to get enticed by these greater interest rates. Choose the long term CDs only if you are willing to let the money be held on deposit for a longer duration and if you don’t need the funds in the near future. Otherwise, you may be paying a large early withdrawal penalty for any urgent withdrawals before the maturity period. The risk of an early withdrawal penalty will defeat the very purpose of investing money in a CD. Always check the early withdrawal penalty rates for your available CD investment options before choosing the CD term.

While longer term bank CDs will have higher CD interest rates, the CD investor is committing their funds for a longer period of time at fixed interest rates and will now be foregoing any alternative investment options while those funds are locked in for the term of the CD. Other investment options may include higher CD rates should rates rise while the initial CD investment is locked up for its full term.

In order to obtain the best CD rates and CD term it is crucial to shop and compare CD interest rates. Before you consider purchasing a CD from your bank, make sure you fully understand all of its terms. In general longer term bank CDs are better investment options when you want to get higher interests but lack liquidity. Read and understand the terms and conditions carefully before making any CD investment. Bank CD investors should have sufficient knowledge to avoid the pitfalls in their investments, especially CD duration which involves a commitment over a period. The financial decision you make regarding the bank CD and bank CD term will decide the future of your investment.

For more information on the best CD rates by term refer to the following pages; 3 month CD rates, 6 month CD rates, 1 year CD rates, 2 year CD rates and 5 year CD rates.

Features of a Bank CD

A bank certificate of deposit can be a very good investment which can provide some of the highest returns in the category of safe and secure investment choices. Most bank CD’s are FDIC insured and therefore carry extremely low risk. Bank CDs come with a variety of terms, CD interest rates and features but all bank CDs have some similar features which should be reviewed carefully before investing.

The interest rate on a bank CD is usually a higher rate than a savings account, because the money cannot be withdrawn until the maturity or full term of the CD. The term of a CD is the period or duration for which the money has to be deposited with the bank. With a traditional bank CD, the deposit in the account is locked for the term of the CD. The CD account holder will not be able to withdraw from the CD within this maturity period. The minimum term or maturity of a CD is usually seven days. The maximum term of a CD is usually five or ten years. The CD interest rate is generally higher the longer the CD term.

The maturity date of a CD is the date on which the CD completes the term. Customers can receive the invested principal along with the interest due on the maturity date. Usually banks and financial institutions provide a grace period after the maturity date after which the CD holder can withdraw the amount. If the customer fails to take action during this grace period, the bank CD will often automatically be renewed for a fresh term at the current CD interest rates offered by the bank. Hence, CD investors should keep track of the maturity date of the bank CD or CDs they invest in.

Most banks inform the customers about the CD maturation well in advance. If you fail to act in time, your money may get locked up for another term with the current CD interest rates now offered by the bank. If the market interest rates have changed significantly, then it will be wise to withdraw the amount at maturity and reinvest in a new bank CD rather than going for an automatic renewal.

FDIC insurance is another feature you have to consider while selecting a CD. The Federal Deposit Insurance Corporation guarantees investments up to $250,000 per person per account type in a bank. FDIC insured CD’s carry less risk and hence this is a compulsory feature to look for while choosing to invest in a CD.

The last and the most important feature of the CD is the interest rate. CD interest rates vary greatly between banks and will vary between the different CD types and CD terms. CD interest rates have the greatest variation based on the term of the CD and the current interest rate environment.

Longer term CDs pay higher interest rates than shorter term CDs and the current interest rate environment or overall level of bank rates will dictate the overall high and low range of bank CD rates. A bank CD rate is often established based on other savings rates and competitive bank rate products and will not have interest rates that are significantly above the average rates available among similar products or investment choices.

The CD interest rates are displayed by the APY or Annual Percentage Yield. APY considers compound earnings based on the CD interest rate offered and the period over which the interest is compounded or added to the account. When comparing similar CD rates, the higher the compounding frequency the higher the rate of return will be on the bank CD account.

Carefully read the terms and conditions before you apply for a bank CD. Compare the bank CD options from a number of banks when choosing a CD account. Bank CD options to review should include the CD interest rate, the term of the CD and the minimum deposit requirement needed to open the CD account.

A CD can be a beneficial financial instrument to obtain a high rate of return and gain financial stability. A little research about the bank CD options and careful reading of the terms will help you to make wise decisions regarding your CD investment.

For more information on the best CD rates by term refer to the following pages; 6 month CD rates, 1 year CD rates, 2 year CD rates and 5 year CD rates.

What is a Bank CD

Certificates of deposit are monetary instruments of deposit with a bank or a financial institution. The bank CDs are deposited for a fixed time after which they reach maturity. With a standard bank CD, the bank guarantees a specific sum of interest depending on the term and amount of the CD investment.

When an investor or saver purchases a bank CD, they are investing an amount of money that has to be at least the minimum deposit amount for the particular bank CD for fixed period of time which is referred to as the term and can be anywhere from a few days to several years and the bank pays the account holder interest on the amount of CD deposit until it matures at which time the amount deposited is returned to the investor or account holder.

Bank CDs earn interest based on the CD interest rate that is advertised as the Annual Percentage Yield or APY by the bank. The bank CD APY takes into account the frequency of compounding interest.

A certificate of deposit is good option when it comes to investing for safety and security. The investment carries low risk since the FDIC (Federal Deposit Insurance Corporation) provides a guarantee for deposits up to $ 250,000 per person per bank per account type.

Most bank CDs pay a fixed interest rate until they reach the end of their term or maturity. However, the types of bank CDs available have become more diverse over time. There are now several different types of bank CDs available other than fixed term and fixed rate CDs. Investors may now choose among variable rate CDs, CDs that have predetermined rate changes over time, long term CDs, and CDs with other special features.

The acceptability of CD’s have grown steadily over the past decades because of its low risk and assured returns. The interest earned on a Certificate of Deposit is directly proportional to the principal, term and the frequency of compounding interest. Once a CD completes the term of deposit or reaches maturity, the account holder will be able to withdraw their capital plus any interest accrued on it that was held in the CD account.

The major drawback of a bank CD is the lack of liquidity or access to the funds that held in the account. Bank CD account holders that redeem their CD before it matures may have to pay an early withdrawal penalty.

Once a bank CD account is opened, the account holder should be aware and keep a reminder of the maturity date. Normally there is a grace period after the maturity period so the account holder can notify the bank to renew the CD or return the deposited amount. During this time you can either choose to withdraw or renew. If you miss to take prompt action during this period, your deposit money will be renewed with a fresh maturity date. Be sure to go through the terms of automatic renewal before investing.

Before investing in a bank CD, it is good to do a comparative analysis of the various CD rates and terms that are offered. In order to research CD rates thoroughly, investors should compare local banks as well as national banks and online banks since CD rates and terms may differ widely among different banks. Check out all the details regarding the CD terms and CD interest rates before you forward the application for a CD.

For more information on the best CD rates by term refer to the following pages; 6 month CD rates, 1 year CD rates, 2 year CD rates and 5 year CD rates.

How To Open A Bank CD

Chances are high that when you read this article, you have a Midas touch and earned some money that you want to earn a high rate of return. There are a lot of safe and secure investment choices available in the banking industry, but choosing the best account option that matches your needs is all that counts. One available investment option that offers a high rate of return with safety and security is a certificate of deposit. Some investors and savers that have not invested in bank CDs are not familiar with just how easy it is to compare bank CDs and how to open a bank CD quickly and easily.

Before someone learns how to open a bank CD, they should become familiar with some of the basic attributes and features that are offered with a bank certificate of deposit.

Certificate of deposits are one of the safer forms of investment which can earn more interest than the conventional savings account or bank money market account. Bank CDs have various options regarding the term or length of maturity for the CD and how the interest earned can be accumulated or transferred.

Bank CD’s have a maturity date on which you receive the capital back that is initially deposited in the account with the bank. Of course, bank CDs have various interest rates depending on the length of the term and the bank offering the CD. Bank CD account holders can choose to receive the interest earned on the bank account into the CD to compound the interest earned or have the CD interest paid out to another account.

It can be quite easy to open a bank CD. A new bank CD account holder will need just a few documents and identifying pieces of information such as your social security number, driving license and proof of address. There are a number of local banks as well as online banks that offer CD’s with good rates of returns to choose from. Choose a bank that is either local or online after checking the CD rates and terms to find the best option that fits your needs.

You can choose the term or duration of the CD from a few days to as long as ten years, depending on the CDs offered by the bank. The bank CD interest rates are predetermined and hence you will have a clear idea about your returns whether monthly, annually or measured over other intervals at the time you open the bank CD.

The minimum deposit needed to make a CD s usually between $250.00 and $5000 but may range lower or higher depending in the bank offering the CD. To open the bank CD, select the amount of deposit you wish to make, fill in the application form and submit it along with other required documents like the social security number and/or driver’s license, address and contact information for the local bank or online bank.

Be sure to fill in the details of name, address, phone number deposit amount, rate, duration and a personal bank account along with an e mail id if you are opening the bank CD online. A bank routing number should be provided for the bank account to facilitate the electronic transfer of money to make the initial deposit in the bank CD. You can choose to pay the deposit money via check or through online transfer of funds when you open the bank CD account.

The deposit in the bank CD is locked up until the maturity of the CD. Early withdrawal of the fund is allowed by usually requires a penalty payment. In a few cases, you can withdraw money before the maturity date with penalty. If you would like to get better returns, then it is generally necessary to invest in the longer duration bank CDs. Since the interest on CD’s are compounded interest, account holder will earn a greater return if the interest earned remains in the CD account.

Before opening a bank CD, compare the best CD rates with both local banks and online banks. Make sure you are satisfied with the CD interest rate and the terms offered. To open the bank CD should only take a few minutes to complete the application and may be immediately approved by a brick and mortar bank or may take longer period by some online only banks.

For more information on the best CD rates by term refer to the following pages; 6 month CD rates, 1 year CD rates, 2 year CD rates and 5 year CD rates.