6 tips for first-time CD shoppers

Understand early-interest withdrawal
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Understand early-interest withdrawal

Investigate your early-interest options. Depending on your age and the goals you have for your new CD, access to interest as it accumulates can help provide you with additional money before it matures.

For example, some of Discover's CD account holders who are approaching retirement use interest from a CD as a source of income, Olszewski says. The bank allows customers to designate a Discover online savings account or an outside account within the interbank clearinghouse network for access to monthly transfers of accrued CD interest.

However, this privilege does come with a price. While access to interest provides you with another stream of income, Taylor says that removing this money will lower your APY. When interest is withdrawn, it does not receive the benefit of the compounding rate.

Simply put, the more money you keep in your CD, the more money you can earn.




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