How to Compare IRA Bank Rates
CDs provide safety and income to millions of investors under the umbrella of FDIC protection. Conservative investors constantly seek CD offerings that pay the highest rates. However, many CD investors may not be aware of some of the resources at their disposal to accomplish this. Taking just a few minutes to compare IRA bank rates can really pay off.
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Instructions
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Determine your investment objective and time horizon. If you are investing long-term, then a different issuer may have a better rate than they have for a short-term offering. For example, Bank Midwest might offer a 6-month CD paying the highest rate available anywhere as of 2010, but its 5-year offering could be a half-percent below the competition. You should also gauge the possibility that you will have to break into the CD at some point to access the principal. Purchasing a CD that can be sold at any time in the secondary market may be wise if this is the case.
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Check your local newspaper. Most banks will print their CD specials in the Sunday edition or other local periodicals. You can also call some local banks and see what kind of rates you can negotiate.
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Log on to Bankrate.com and get a quick list of the highest CD rates offered nationwide. This website is one of the most well-known and popular sources for online CD rates and other financial information.
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Check online banks, such as EverBank, and also brokerage firms, who often issue brokered and callable CDs that trade in the secondary market and pay higher rates than traditional bank CDs. Brokered CDs are FDIC-insured CDs that are issued by banks but sold through investment firms. These offerings usually pay higher rates than traditional CDs. Callable CDs can be recalled by the issuer after a certain period of time, such as five years. In return for this privilege, these CDs also pay a higher rate than non-callable issues.
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Weigh the rate offered by a given CD against its maturity. A CD paying 4% that matures in two years is probably not as good of a deal as one that pays 3.5% and matures in one year. Stay abreast of current interest rates; if rates are rising, shorter-term CDs may be a better deal than longer term offerings. Constructing a CD portfolio with laddered maturities is a common strategy used by experienced bond investors. This means that an array of CDs is purchased with staggered maturities from shorter terms to longer terms. As each CD matures, it can be reinvested at current rates as they rise.
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References
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