How to Get the Most From a Bank CD?

Answer 1

Bank CD rates are as variable as savings account rates, but they're usually a little higher even when interest rates are very low everywhere. Shop for the best rates the way you would shop for any major purchase. Once you've committed to a CD, you must let it mature or risk losing money on it.

How Much Money Can You Make on a Bank CD?

Exactly how much you can make depends on several things, including how much you can invest, the interest rate the CD pays and other terms set by the bank you buy it from. You won't get rich with a bank CD, but you can add to the money you have available and you can have money when you need it if you plan it right.

How to Find the Best Bank CD Rates

Check with several banks and ask specifically about rates for the amount of money you intend to invest. If you have a hundred dollars, the interest rate will be lower than if you want to buy a thousand dollar CD, but don't assume that they more you invest, the higher the rate will be. Get the numbers on paper and don't let the big numbers frighten you if you're investing only a small amount.

Don't Lose Money on a CD!

After you buy a CD, you can't cash it in until it matures without losing money on it. It will cost you a penalty which could be all the interest the CD has earned and possibly the interest it hasn't earned. In other words, if you want to cash out a CD before it matures, you may have to pay the interest it would have earned had it gone to maturity.

Bank CD rates fluctuate with the economy like other investments. You have the option to decide when to buy and how much to invest to lock in the best interest rate.