How To Find The Highest Certificate Of Deposit Rates

A certificate of deposit (CD) is a time deposit investment offered by banks, credit unions and thrift institutions. CDs are similar to savings accounts in that they are insured up to $250,000 by the FDIC for banks or by the NCUA for credit unions. They are, however, different from savings accounts because the deposits are for a fixed term ranging from three months to five years.

Higher interest rates are offered on CDs over savings accounts because the CDs cannot be withdrawn upon until the term has been met. Although bank failures in the last few years have been on the rise, the insurance coverage by the FDIC and NCUA continues to make CDs the safe investment of money that it has always been in the past.

Finding the highest CD rates in today's market can be tricky, but the general rule is that the longer the term of the CD, the higher will be the interest rate. This is how the CD market has always operated. You should also read the major financial publications, check online, and refer to the Security and Exchange Commission (SEC) or the North American Security Administrators Association (NASAS) for certificate of deposit information.

Interest rates will rise eventually, and with this in mind, it may not be wise to sink your money into a very long term CD. For instance, you may have one interest rate on a five year CD that would not be higher than a 9 month CD. However, if interest rates are generally rising, had you a 9 month CD you could reinvest your money later in the year at a considerably higher interest rate. To meet this possibility a number of banks and credit unions offer one time "bump up" interest rates on their long term CD depositors to encourage the long term CD purchases.

There are a number of guidelines to keep in mind to obtain the highest certificate of deposit rates:

1. A larger CD will generally receive a higher interest rate.
2. A longer term CD will usually receive a higher interest rate.
3. Personal CD accounts will generally receive higher interest rates than business accounts.
4. Smaller banking institutions generally offer higher CD interest rates than larger ones.
5. Callable CDs (those that a bank or credit union can call in before the term has ended) generally offer the highest CD interest rates.
6. Institutions that do not offer FDIC or NCUA insurance on their CDs usually have greater interest rates than those that are insured.

Certificates of deposit will remain a safe way to invest your money. Obtaining the highest certificate of deposit rates available will depend upon the conditions set forth above and will improve as does the economy.


Copyright (c) 2011 Sandra Tiffany