5 high-yielding, but risky CDs

Some CDs are exotic
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Certificates of deposit may sound plain vanilla. But some are more like rocky road -- and worth extra scrutiny.

While banks may issue less-complicated CDs, these varieties are more complex. They include callable CDs, which can be yanked before maturity, or CDs with high withdrawal penalties that can chew up hard-earned interest. Index CDs, where your upside is limited, may be linked to volatile indexes such as the price of gold.

"If it's too complicated, why are you buying it?" asks Donald Cummings, managing partner at Blue Haven Capital LLC in Geneva, Ill. "Complexity adds cost."

Another tip-off is a high interest rate, such as those for some offshore CDs. But you may sacrifice safety. The key is to understand what you're buying. One approach is to calculate your return in a worst-case scenario.

Here are five CDs to research thoroughly before plunking down money.




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