Managing a CD: How to Manage a CD Account: Introduction
CD accounts have increased in popularity over the years. Investors who want an investment type that guarantees a return to their investments, as long as they keep their money in the accounts until maturity, invest their money in CDs. Managing CD accounts is very important. Investors who want to make the best of their investments should monitor their accounts periodically to make sure that nothing is standing in the way of their goals. Everyone who invests in CDs wants to retire with a diverse portfolio of investments. Investors must monitor their investments to make sure that everything is as it should be.
List of Things to Monitor While Managing a Certificate of Deposit CD Account
CD Rates – Investors must make sure that the rate that they agreed upon is the same rate that they currently have. Investors sometimes sign up for rates that change, and they don’t even know it. This is why it is so important to read all account documentation—especially the fine print. Investors may have received variable CD rates, callable CDs, or step up and step down CDs. These types of CDs can affect interest rates greatly. It is also important to monitor this information in the event the financial institution is at fault so that you can correct the issue quickly.
CD Interest – Interest is what all investors look forward to receiving. Investors can receive their interest monthly, annually, or at maturity. Investors who do not receive their interest monthly may want to monitor their account more closely. If the interest does not seem to add up to what they were promised based on their interest rates, investors may need to contact the financial institution. Investors should discuss how their interest is calculated to determine exactly how much they should receive when the interest is due at payout.
CD Penalties – Penalties can take a substantial amount from investors’ interest and principle. Issuers charge penalties for early withdrawal of all or a portion of the CD accounts. CD penalties can range from a few months of interest to a percentage of the principle deposit. If investors do not monitor their accounts when they withdraw funds, they may have larger penalties than they expected. It is important to monitor the accounts on a regular basis—especially when withdrawing money.
CD Maturity and Terms – The maturity date is the day that investors can withdraw their money without penalties. This date is especially important for CDs with automatic renewal options. Automatic renewal is another feature that investors may not know that they have on their accounts. This feature gives the issuer the authority to renew the accounts as they wish. In some cases, investors may receive lower rates and longer terms. There is usually a 7-day grace period before the CDs renew so investors should keep a close eye on the maturity date and terms of their CDs.
CD Term Changes – Investors should look for anything different on their accounts. Laws change often that may affect important aspects of their accounts. Online accounts may have notices from the issuer. It is important to read this information because it may affect their investment in a negative manner.
Tips on How to Manage a Certificate of Deposit CD Account Effectively
- Investors should monitor their accounts online. Many financial institutions offer this feature for convenience for customers. They can see changes to their account immediately with this option.
- Monitor accounts at least once per month. When investors check their accounts once per month, they can make sure that there are no problems with their accounts. If there are problems, they can solve the issues quickly.
- Visit financial institutions on a regular basis. The key to monitoring accounts is to do it on a regular basis. Investors should visit their banks and credit unions to make sure that the original agreement that they signed up for is still in place.
- Meet with financial advisors regularly. Investors who trust their portfolios to financial advisors should contact them regularly to check on their accounts and make changes if necessary.
- Monitor monthly statements very carefully. Financial institutions send out monthly statements of their customers’ accounts. During this time, investors must verify that all of the information on their accounts is correct. Monitoring these statements can help investors plan for their futures.
Keeping an eye on CD accounts is so important to the success of the portfolio. Any changes or discrepancies can be found in a timely manner when investors monitor their accounts. Investors should always read the fine print and any documentation that the issuers send regarding their accounts. Doing so is the only way to truly control their CD accounts and manage them properly.