Earn more than a bank’s savings account. Is a certificate of deposit right for you?
A certificate of deposit can be a good way to earn interest in lieu of a savings account.
Actually, CD’s interest rate can be twice as much as a traditional bank, but there are some questions you should ask first to determine if it’s right for you.
- How soon will you need the money? With CD’s you usually can’t touch the money for 3 months to 5 years.
- What are the fees? If you have an emergency and need that money, how much will it cost to withdraw it early?
- Is it the best interest rate? Shop around to find the best rate.
- Biggest bang for your buck. Experts say you should be able to find rates from about 2.5 – 3 percent for a 5-year term.
- Lastly, make sure your investment is FDIC insured.
CD Calculator: Find Out How Much You Can Earn