Compare CD Rates–It is so easy to find CD rates these days. One of the many places to find good CD rates is at local banks. Rates vary by financial institution so it is important to shop around for the best rates. This is the Internet age so investors can find anything on the Internet. Financial institutions offer competitive rates online and update the rates on a daily basis.
This is important to remember when shopping for the best rates. The Internet makes it easy to compare many different rates from various financial institutions. Investors must use all of their resources to their advantage to receive the most beneficial CD options.
Importance Things to Consider When Comparing Certificate of Deposit CD Rates
Unless they are experienced in investing in CDs, investors should research CDs and the historical rates. CDs do not offer the highest return on investments but they do protect the principle that investors put forth. Investors should compare CD rates for a while before investing their money. Here are a few considerations that investors should take into account when comparing CD rates:
- The Insurance Backing of the Financial Institution – Do not get caught in a situation with a bank or credit union that does not insure investors’ money. If the CDs are not insured up to $250,000, investors should look to put their money in another financial institution. Keep in mind that credit unions do not always have FDIC backing. In the event that they do, it may be less than $250,000. Knowing this information is very important to those investing large sums of money into CDs.
- The Institution’s Quality – This has been a touchy subject since the enormous number of bank failures during 2008. Investors are very particular about the financial institutions in which they trust their money. Try talking to a friend or relative about the banks or credit unions in which they invest their money. It is a good idea to get references from others when comparing CDs. In addition, investors should check the Internet and newspapers for articles about the banks in which they are considering purchasing CDs. Negative articles should send up a red flag that this is not the right institution in which to invest. Also, check the stock of the financial institution if it is a public company. An unusual dive the institutions stock may be a clear indicator that this is not a quality financial institution.
- Check the Call Features – Many investors do not know what call features are. Call features give the issuer the ability to terminate CDs early. Investors may thing that they are locked into a high interest rate when they really are not. For example, if investors lock in a high interest rate and the interest rate falls, the issuer has the right to terminate the CDs. Make sure to avoid CDs with call features because it can cost in the end.
Tips for Comparing Certificate of Deposit CD Rates
- Investors should not have a comfort zone. Investors may not get the best rates unless they look outside of their current financial institutions. The only way to compare rates is to look around. CD rates are available locally and online. Great deals may be waiting in unlikely places.
- Investors should make sure that they are able to let their money sit for a while. The best CD rates are not available on short-term investments. The highest rates are reserved for the longest terms. The amount of money invested is another factor that investors must consider. Online financial institutions usually have more term options than local banks do.
- Compare the penalties for each financial institution. All banks have different options for early withdrawal. No one probably goes into such an investment with the plan to withdraw their money early but thing out of their control can happen. Some financial institutions have a penalty of a few months interest and others have a slightly higher or lower penalty. One strategy to combat loses is to find the highest CD rates so that investors minimize their losses if they must withdraw their money early. This strategy takes a great deal of research when comparing rates. Investors can always reinvest their money if rates increase.
Investors have many things to consider when investing in CDs. CDs are the best way to save money and earn a return. Compare rates and financial institutions for a few months before making the commitment to certain terms, financial institutions, and cd interest rates.