What to Look For in a Bank CD

These days, you'll often find a wide variety of options when it comes to buying a bank CD or Certificate of Deposit.With the rise of online banking, and competitive rates, a bank CD is one of the safest places to put your money.
A bank CD works like a savings account, except that you're paid a higher interest rate for keeping your money in the bank for a set period of time. You don't need to "open a CD account" as you would a traditional savings account. Bank CDs can be bought with a deposit as low as $1,000 and the timeframe for receiving your funds back (known as the "maturity date") can be as short as six months, or as long as five years.
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How to Choose a Bank CD
When choosing a bank CD, the most important thing you'll want to consider is the interest rate. The amount of return you'll get on your investment depends on the length of time you leave the money in the bank, and how much you deposit. Because of competition from local, national and online banks, today's bank CD rates are often very competitive. Even fractional amounts such as a .03 or .08 difference might not seem like much, but when you consider the length of the investment and how much you're willing to put away - along with the safety and security that bank CDs provide, your return can add up quickly.
Benefits of a Bank CD
A bank CD is the ideal choice for both short term and long term investment needs - when the security of your money is your top priority. Because bank CDs are not subject to the whims of the stock market, like money market funds can be, they provide an ideal way to earn some extra money without the risk of loss. Like traditional savings accounts, bank CDs are FDIC insured (if the Bank is an FDIC member), meaning they're backed by the strength and solidity of the U.S. government and secured up to the maximum limits set by the FDIC.
When is a Bank CD Right for You?
A bank CD is a great way to keep your money safe while earning some extra income. If you've received a bonus from work, or you're saving toward something special, a bank CD can help you reach your goal faster than a regular savings account. Plus, you can have your CD set to automatically roll-over into a new timeframe at the time it matures, giving you the opportunity to earn extra money while keeping your funds at a secure, financially-stable banking institution.