How to Get Better CD Interest Rates?

Answer 1

Over the past few years, the turbulent Stock Market has caused many people to become resistant to invest their money. Because of this, many people are looking to find new and secure ways to invest their money. Unfortunately, low risk investments, such as placing money in a CD, tend to come with very low returns. Luckily, there are several ways a person could get higher CD interest rates and improve their overall return.

The first way to get better CD interest rates is to open longer term CD accounts. Since federal interest rates are extremely low, banks are not able to offer high rate CDs to their customers. However, banks are more willing to offer higher interest rates to customers that are willing to place their money into a longer term account. Those who place their money in long term CDs, with commitments of 5 years or more, could receive interest rates that are two or three times the size of short-term CD accounts. However, prior to placing all of your money into a long-term CD, it would be wise to check the bank's policy to find out what penalty you will have to pay to withdraw your money early.

The second way to get better CD interest rates is to deposit more money and open a larger CD. Banks are often willing to give customers who open large jumbo CD accounts a better interest rate than those who open smaller accounts. Jumbo CD accounts, which typically require an initial balance of $50,000 at most banks, will normally come with an interest rate that is 50% or more than a traditional smaller balance.

The third way to get better CD interest rates would be to shop around for CDs. Almost all traditional banks offer CDs to their customers, but the interest rates offered can vary significantly. To encourage customers to open an account at their bank, the bank will offer CD accounts that come with considerably higher interest rates. However, when opening one of these accounts, it is important to verify that you will be able to withdraw your funds penalty free after the initial high interest period has expired.