CD’s Are They a Good Investment?
October 10, 2011 by admin
Filed under Finance & Loans
When you hear CD’s do you think of the latest music from your favorite band? Many people do and not everyone realizes there is a way to make your money work with you. Unlike a savings account, CD rates garner a higher interest than a savings account. Unlike the stock market where you risk your money, a CD or certificate of deposit is a good bet. If you can afford to put your money in a CD and forget it is there then at the end of your term you are likely to have a good deal of money. This is perfect for your children’s college plan, or that special vacation you have always wanted to go on when you are older. Is there a drawback when buying a CD? There is one and you should know you cannot withdraw the money before the maturity date or you risk paying a penalty. When looking for good CD rates you should shop around and look for the best possible rate. Compare Discover bank to another bank for example and see where they differ on CD rates. Some banks also have larger withdrawal penalties, so it is best to look at all your options. Suppose you have compared Discover bank to another one and one has a larger penalty for early withdrawal but the other pays a higher interest. Decide which is more important to you, withdrawing early, or a higher yield. Another good thing about CD’s are they pay an annual percentage yield as well as compound interest.
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