CDs are low- to no-risk investment options, but lower risk means a lower yield. Because rates are currently low, make sure to compare CD rates and find the highest yield possible for the maturity date that fits you. Bankrate’s CD rate comparison guide can help you find a local or national CD to suit your needs. Make the most out of your certificate of deposit with a couple of simple tricks.
Choose short-term high-yield CD rates
When CD rates are at a low average, keep the maturity short. Some short-term options for CDs are three-, six-, nine- and 12-month-long maturities. While there are longer maturities with higher-yielding CD rates, the quick turnover of the CD will give you the opportunity to utilize future rate hikes.
Laddering allows you to always benefit from the highest CD rates without giving up any liquidity. An example of laddering would be a three-year ladder with three rungs. With $15,000 to invest, you would put $5,000 into a one-year CD, $5,000 into a two-year CD and $5,000 into a three-year CD. When the first CD matures, you gain interest and still have another CD due in a year. This provides you with interest gains every year for a set period of time. To calculate your earnings from each CD, use Bankrate’s CD calculator.