Friday, January 7, 2011

3 routes to better CD rates

While CD rates are hovering near record lows, they can still provide a safe place to store your money while earning some additional income. All CDs are not created equal, though. As you begin your quest to lock in an interest rate, here are three tips to help make your search more successful.

Take CD shopping seriously

Finding the most competitive CD rates requires some research. First, determine how much you can afford to invest and the length of time you can part with your funds. Then, start comparing rates at a wide range of banks. Rather than simply look at credit unions and banks in your town, go online to compare the best CD rates available nationwide. While larger amounts and longer maturity periods typically mean higher yields, you can find attractive rates for short-term CDs, too.

Find deals that do more for your dollars

Remember – the banking industry is competing for your money. With creative marketing departments on their sides, banks promote all kinds of programs for CDs to entice your interest. These deals may lock you into a longer maturity period, but they typically reward you with a higher yield. To determine if the deal is worth it, you can calculate your CD income before you invest.

Look closer at your CD

Before you make your final decision on a new CD, be sure to educate yourself on the fine print. The majority of CDs have stiff early withdrawal penalties. If you have any concern that you may need to remove your money before your account matures, make sure you find a CD with some flexibility. 

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