CD rates are at an abysmal low, but if you’re looking for a safe investment in this shaky economy, CDs might be the answer for you. Guaranteed up to $250,000 by the FDIC for banks, or the NCUA for credit unions, CDs will certainly put a little extra money in your bank account. Before snatching up the nearest CD in sight, make sure you know what you’re looking for.
Shop around for CD rates
Do your research before deciding on a CD. Decide on the amount of money you want to invest and the amount of time you can do without those funds. Most certificates of deposits have a significant penalty for redeeming before the maturity date. Larger deposits and longer fixed maturity dates receive higher yields, but occasionally you can find a higher yield on a shorter maturity date. To shop and compare CD rates nationally and in your area, use Bankrate’s CD rate finder.
Take advantage of deals
Marketing departments at banks occasionally have deals to catch your curiosity. These deals may come in the form of a slightly longer maturity date, such as 13 months instead of 12. They also generally pay out at a higher rate. The deals are used to get you through the door, but they can be worthwhile.
Read the fine print
Read the fine print before you settle on a CD. If you think you might need to redeem before the maturity date, make sure the penalty is smaller than other CDs you’ve looked at. Use Bankrate’s CD calculator to figure out how much interest you’ll accrue over a set period of time with a particular CD.