April 4, 2020

Savings CD Rates

savings-cd-ratesDue to the recent volatility in the stock markets across the globe, many people are skeptical of investing their money in the market. For those that do not want to take on the risk of investing, but are still looking for a way to earn a return on their money, opening a CD account could be a good option. A CD is an account which will provide you with a fixed rate of return for a specific amount of time. Best of all, both the initial deposit and the interest earned is fully guaranteed by the FDIC. While a CD can provide a consistent rate of return, interest rates on these accounts have been quite low for the past few years. Luckily, there are ways to find current interest rates with above average yields.

Choosing Longer Terms for Better Rates

One way to get a better CD rate would be to open up a longer-term certificate of deposit. When going to open up a new CD account, you will generally have many different term lengths to choose from. These will often range from just 90 days to over 60 months. In general, the longer that your CD term is, the better interest rate you will receive. However, when you open a CD you need to be aware that if you withdraw the funds prior to the maturity date of the CD term, you will be charged a penalty. This penalty can drastically cut into your overall return on investment with a CD. Also, since you are committing your money for a long period of time, along with investing in a longer-term CD comes the risk that the interest rates for CD products could increase in the future and you will not be able to take advantage of the higher CD rates.

More Money, Higher Rates

When looking for the best rates on certificates of deposits, you will likely also find that depositing more money into the accounts could lead to higher interest rates. In order to entice potential customers to deposit even more money, many banks will offer much higher rates to people who are willing to open up a CD with a larger balance. These accounts, which are typically called jumbo certificates of deposit, will normally come with rates of 0.50% or higher compared to standard accounts. While it varies from one bank to the next, most banks will require you to deposit at least $25,000 to take advantage of the jumbo CD rates.

Be On the Lookout for Promotions and Incentives

look out for special promotions provided by banksAnother way to find the highest quality rates would be to look out for special promotions provided by banks in your area and online. The retail banking industry is very competitive and most banks are often providing potential customers with great rates on CD accounts and other financial products. These products are often available for people in all financial positions and can normally lead to fixed interest rates of 0.25% or higher than other competing banks. This can lead to a significant amount of more interest income over the course of the CD.