How to Compare Online CD Rates
If you're trying to put up money for a rainy day, or just looking for a less risky way to invest your cash, consider opening a certificate of deposit (CD) account. One way to find the best current rates on a CD is to compare them using online tools. Some banks also allow you to establish your new account online and start transferring funds to the CD immediately.
Other People Are Reading
-
Identification
-
A certificate of deposit is a type of deposit account that is a cross between a savings and investment asset. You must establish the account and then either add a set amount of funds to the account initially or add money to the account over time. At the end of a certain period of time called the "maturity date," the bank pays you back the principal plus interest accrued over that period.
Types
-
You decide how long you want the CD account to mature. Banks quote rates for CDs with lengths ranging from three months to several years. You can establish a standard CD account for a jumbo CD, which requires a large deposit of about $100,000 or more. Another type is the callable CD that gives a bank the right to call in an earlier maturity date at any time and give you back your money (plus interest for that period). Some CDs have fixed rates while others have variable rates that may change over time.
-
Benefits
-
A CD is beneficial to someone who wants to save money for the future for two main reasons. For one, the funds are held in an account where you cannot withdraw small amounts, only make deposits. If you withdraw money before the expiration of the CD account, in most cases you must withdraw the entire amount and pay a penalty fee. The other benefit is that CD interest rates tend to be higher than standard savings accounts.
Solutions
-
A number of websites allow you to compare online CD rates before making a decision. Bankrate is a solid source for national and local CD rates. You can compare a number of different CDs, from standard three-month CDs to one-year jumbo CDs. Compare a range of CDs offered by various banks. Select the type of CD product, then sort it by lender or rate. Money Rates has a similar format: Choose the CD term in months or years, along with the amount you want to add to the account to compare rates.
Expert Insight
-
The Federal Deposit Insurance Corporation offers a list of tips for people considering CDs. The suggestions include finding out the early withdrawal penalty, asking for the exact terms of any callable CD and investigating how a variable CD rate will change. When considering a variable rate CD, find out if the changing rate is based on a financial indicator, like the performance of the S&P 500 or a specific rate schedule defined by the bank.
-
