How to Buy a Certificate of Deposit with a Great Rate

Certificate of Deposits or CDs are an easy way to start saving for a future project, like buying a house. They are also a good start for a child’s first saving account. Some people like CDs because they are insured. In the past only banks used to offer CDs, today many financial institutions offer them to their clients. These are ideas on how to buy a Certificate of Deposit with the best rate.

Difficulty: Easy

Instructions

1. Is a CD the right saving vehicle
   
   Decide if a Certificate of Deposit serves your saving needs. Generally, CDs are insured by the FDIC and don’t have a required minimum amount. They have a maturity schedule; you will pay a fee if the CD is redeemed early. CDs rates may be better than checking or saving account’s rate. Most financial institutions can sell certificate of deposits.

2. Shop around for CDs
   
   Shop around on the internet for the best CD rates. Use a free CD rate comparisons service. These services offer a list of financial institutions with the rates paid on CDs. Review the rates, the minimum amount (if any), the FDIC insurance and fees for early redemption.

3. Find the best CD rate
   
   To get the best rate on a CD, consider buying a longer maturity CD with a minimum required investment, and no fees. Take a look at Credit Unions, Saving Banks and Brokers. These institutions generally offer higher rates and their CDs are FDIC insured.

4. Open an account
   
   Open an account and buy the Certificate of Deposit. Expect to receive confirmation on the mail from the institution. Most companies send a notice; very few still use an actual paper called "Certificate of Deposit".

Resources

• HSBC Bank
• Bankrate.com