How to get the best CD rates

When buying a CD, other considerations can make the rate difficult to compare or may override the rate issue.

Bank or brokerage CD? Most people buy certificates of deposits through their bank, credit union or savings institution, but you also can purchase them through a brokerage firm or other sales outlets known as deposit brokers. These "brokered CDs" sometimes pay a higher rate of interest, but they also generally have a commission attached. So before you choose a brokered CD because it appears to be paying more, ask about the commission and make sure that you are really getting a higher interest rate.

Fancy or plain vanilla CD? The terms of most CDs used to be simple and straightforward. Today, some CDs have twists and turns that can unpleasantly surprise unsuspecting buyers. For example, if you think you might want to get your money out of the CD before its maturity date, definitely understand those consequences when you consider the rate. Some CDs will let you out of the deal with a smaller penalty than others. If you are looking for this kind of flexibility, prepare to earn a little less or look at brokered CDs, which can offer early resale opportunities.

Will you pay attention? Banks and savings institutions are required to send you a notice when your CD matures, but they aren't required to wave their arms and make you pay attention. If you don't read their notice and tell them otherwise, they'll roll over the CD automatically at the prevailing rate, which may be lower than the one you got when you originally bought the CD. Brokered CDs don't have automatic rollovers.

Automatic rollover may not sound like a big deal if you only own one or two CDs. But it can be a bigger factor if you own several CDs and have to track a number of maturity dates, then trudge down to the bank to sign paperwork for each one to get your cash back.

"Banks like folks who will forget about their CDs," says Hornstein of Structural Wealth Management.

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