cds

Try this tool for comparing CD rates

A certificate of deposit, or CD, is a savings vehicle that pays a fixed interest rate and typically gives you a higher rate of return than a savings or checking account. Since CDs are offered by many banks and brokerage firms, comparing CD rates will ensure that you get the best return on your money.

With a CD, you get a fixed interest rate for a specific amount of time. That means the rate will be paid no matter what the economic situation or what happens in the stock market. However, during the term of the CD, you can't access the money without being hit with a penalty. Because the money is locked up, the rate is typically higher than it would be for savings accounts or checking accounts, from which money can easily be withdrawn.

The traditional CD is the most popular, but many financial institutions now offer "flexible" CDs. For instance, there are "bump up" CDs that let you take advantage of rising interest rates; liquid CDs that allow you to withdraw money without penalty; and zero-coupon CDs, which sell at a discount and realize their true value when they mature.

Consider how much you can invest

Before you even embark on comparing CD rates, consider how long you can be without the money and what penalties you can afford if you do withdraw the money early. Typically, CDs with a later maturity date will have a higher interest rate. Buy your CD from a bank that is well-known and offers Federal Deposit Insurance Corp. insurance. That will protect your money up to $250,000 in the event of a bank failure. Brokerages do not ordinarily offer this coverage, but some have "sweep" accounts, which rely on FDIC backing at the underlying banks.

The Internet has made the process of comparing CD rates much easier. For instance, Bankrate.com has a CD comparison tool that allows you to search CD rates nationally and locally. Keep in mind, the best way to compare CDs is to compare those with the same term and early withdrawal penalty, and each should offer FDIC backing.

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Product Rate Change Last week
1 Year CD 0.90%  0.02 0.88%
2 Year CD 1.02%  0.01 1.03%
5 Year CD 1.59%  0.01 1.60%
 
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