Offshore CDs can be risky2 of 7CDs sold offshore offer temptingly high interest rates. For example, offshore banks in Panama pay a whopping interest rate of up to 8.5 percent on CDs.But they come with a big downside: They're not insured by the Federal Deposit Insurance Corp. "They aren't risk-free," says Greg McBride, CFA, senior financial analyst at Bankrate.com. "High rates compensate you for risks."Because your certificate of deposit isn't insured, your only security lies in the creditworthiness of the organization backing the CD. If the bank defaults, you may not get your money back. Look for better deals here at home. Related Articles:No-penalty CDsCD laddering strategiesCompounding and CD valueCheck out high-yield CDsRelated Links:Risk of brokered CDs variesSurvey: CD early withdrawal is costlyHigh-yield CD rates still your best betCDs and deflation advertisement
CDs sold offshore offer temptingly high interest rates. For example, offshore banks in Panama pay a whopping interest rate of up to 8.5 percent on CDs.
But they come with a big downside: They're not insured by the Federal Deposit Insurance Corp. "They aren't risk-free," says Greg McBride, CFA, senior financial analyst at Bankrate.com. "High rates compensate you for risks."
Because your certificate of deposit isn't insured, your only security lies in the creditworthiness of the organization backing the CD. If the bank defaults, you may not get your money back. Look for better deals here at home.
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A little research could save you BIG on interest.