Certificates Of Deposit

A Certificate of Deposit is one way to invest your money that typically pays more than a savings account. Unlike other investment opportunities, Certificates of Deposit are insured by the FDIC, up to $250,000. This is a great option for those who want to save or invest their money at no risk.

Certificates of Deposit differ from savings accounts in a great many ways. When you deposit money into a savings account, you can take it out at any time without penalty. With a Certificate of Deposit, or CD, as it is commonly referred to, your money is tied up for a predetermined amount of time. Although you can certainly gain access to your money, there are early withdrawal penalties that you will want to be aware of.

The good news is that you can invest in a CD for a relatively short amount of time, such as six months, or you can invest your money for a much longer period, such as five years or more. When you initially invest your money, you will be provided with the pertinent information, such as the rate of interest and the maturity date. It is important to read all of the fine print so there will be no surprises later on. The main thing to remember is that when you invest in a CD, not only are you keeping your money safe but you are earning interest.

Youll want to take your time and find the CD investment that is right for you. Some CDs feature a special death benefit whereby your heirs would be able to redeem the CD in the event of your death, yet without any early withdrawal penalties.

Another thing to keep in mind when considering CDs as an investment is that the $250,000 insurance issued by the FDIC is the amount per depositor per financial institution so if you already have a large sum of money in one bank, you may want to select a different financial institution for your CD investments.

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