Capitalizing On the Latest CD Rates is All About Timing
CD rates can fluctuate significantly from day to day and bank to bank, making it difficult to decide which bank to go with for an investment. In today’s market, CD rates are not as high as what they once were, which makes it even more difficult to determine what the best investment opportunities are for one’s money.
Rates need to be analyzed because when a CD is purchased it is fixed for the duration of the CD. This can range from 6 months to five years and longer. The longer the money is in the bank’s CD, the higher the rates usually become. The fixed rate needs to be taken into consideration because while it’s not going to decrease, it’s also not going to go up, either.
Know Your Market and Reap The Rewards
Since CD rates can change, keeping track of the trends will ensure that you get the best rates. Similar to the way one would keep track of the foreign exchange rate of currency before a vacation, one should do the same thing with the rates of their CDs. This is because the CD should be purchased while the rates are in upwards trend before the rates drop again.
If one were to chart current CD rates on a bar graph, it would look like a very crooked line with very high peaks and very large valleys. The peaks are when the rates are high, which is when one should be purchasing their CD. If the CD is purchased when it’s in the valley, then the rate of return is going to be minimal in comparison to what it could be.
Trying to get the best CD rates is going to be a little bit of guesswork as well as a lot of analysis. Obviously, it is the goal of every investor to get in on the highest CD rates of today before they drop off. The important thing is to not make quick decisions without knowing the trends. Financial advisers can work with investors to make sure that the trends are calculated properly.
Watching Rates to Get the Best Deal
After all, if the current interest rates are at 1% and could be 1.1% by the end of the following week, it would prove to be a wise choice to wait a single week before making the purchase of the CD. Watching these rates, therefore, ensures that the best deal can be had.
It is possible to purchase variable rate CDs as well, though there are many that can be risky because of the ability to lose so much potential return if the CD were to suddenly drop off into one of the valleys. This could be the case overnight, let alone what could happen with a 3 or 4 year CD.
In order for one to get the best deal on current Certificates of Deposit, analysis needs to be made. Regardless of how much the investment amount is, there may be a high rate around, it just needs to be found and timing can be everything.