The Benefit of Making a CD Rates Comparison?

Answer 1

If you are like most people, you may have never thought about getting rich off of buying CDs. CDs are, by all accounts, a low yield investment. They have low interest rates that may be improved just slightly over your current savings account. However, because they do offer better rates than savings accounts and money market accounts, many investors do enjoy buying CDs and including them in their portfolio as a way to balance the risk of their investments. Before you buy your next CD, however, you should take time to do a CD rates comparison.

Small Variations Matter

When it comes to CD rates, you can find fluctuations in rates based on the value of the CD you purchase and the CD term length. A bank will offer a higher yield on a higher value CD as well as a CD with a longer term. So it is possible find improved rates within a single financial institution. However, when you do a CD rates comparison among different financial institutions, you will find that rates can vary from bank to bank as well. Further, a bank may offer different rates within an IRA than they offer outside of an IRA. The variations often are very minute, but they variations do matter. Over time, the difference of even a tenth of a percent can add up to a significant amount of money.

How to Compare Rates

If you are not certain just how significant rate variations can be, consider first researching the different rates available to you. After you have found a few different CDs with different rates that you can take advantage of, you can use a CD rate calculator online to determine which may be more lucrative for you. Consider the option of a renewal and how these small variations can compound if you opt to renew your CD after the initial term expires. Comparing CD rates can truly prove to be advantageous by helping you to make the most sound financial decision. You may not get rich off of buying CDs, but you can make the most money possible off of your investment.