Bankrate.com tracks a variety of fixed-income
banking products that are excellent investment options
for emergency funds, capital preservation or short-term
financial goals. The good news is, these are practically
risk-free investments -- you won't lose any money. The
bad news -- the trade-off for that lack of risk is that
you don't get much return.
Let's go back and consider what's meant by "practically"
risk-free. When interest rates are low, it's fair to assume that
inflation is low. But sometimes the difference between your interest
rate and the inflation rate is so small that you're not getting
much benefit from the interest your deposits earn because inflation
is eroding the buying power of your money. So while you're not risking
your capital, you are taking a risk that its buying power will decline.
For instance, if your certificate of deposit
is earning 2 percent annually, but inflation is running
at about 2 percent, too, it's a wash. Your money is
just keeping pace with inflation. If the inflation rate
is 3 percent, you're actually losing buying power. That's
why it's so important to shop for the best interest
rate you can find -- and Bankrate.com is the best way
Starting at Bankrate.com's home
page, you'll find a section that allows you to "compare
rates in your area." In that box you'll see tab
options for "Mortgage," "Home Equity,"
"Auto" and "CDs and Investments."
Click on the "CDs & Investments" option
and you'll be taken to our home
page for deposits. This is where you'll find the
overnight averages for CDs, money market accounts, passbook/savings,
IRAs and money market mutual funds.
Looking at "Certificates of Deposit"
you'll see a box with today's rates and last week's
rates for five popular CD maturities: 6-month; 1 year;
5 year; 1 year IRA and 5 year IRA.
Click on the link for those maturities
and you'll see "Search
By 100 Highest Yield" and "Search
By State." Chose the "best rate"
option and you'll see the full line-up of CD
rates that Bankrate surveys.
Click on whichever maturity you're interested
in and you'll see the best rates offered nationwide.
contains all the information you need to buy a CD from
any of the listed financial institutions. All of the
institutions make their CDs available across state lines.
& Sound rating for the institution is always
listed, the Web address and telephone number is listed
Next to the "Institution"
column is a "Date" column. This is the
date the survey was taken. The date is important
as many lenders change rates several times a day.
A quote several days old is often no longer valid.
The "Rate" column shows the simple interest rate, the
annual rate of return without the effect of compounding interest.
The "Yield" reflects the total interest to be received,
based on an institution's compounding method for a 365-day year.
You'll also see a column labeled "CM"
for compounding method. These include: S -- Simple interest;
A -- Compounded annually; H -- Compounded semi-annually;
Q -- Compounded quarterly.
The "Minimum Deposit" column shows the lowest dollar
amount the institution accepts to buy a CD for that rate and term.