like at the bank?? does it grow more intrest and is there a certin time you have to keep money in it. and if you take it out before that time does it lose its intrest?
2007-01-02 03:47:22 · 5 answers · asked by american_eagle_guy1983 3 in Business & Finance ➔ Personal Finance
A Certificate of Deposit does earn a lot higher than a savings account would. There are many different terms for a CD normally ranging between 3 months to about 7 years. The interest rate you earn will depend on the term you choose. Usually the longer the term, the higher the interest rate but sometimes a financial institution will have a special promotion on a CD so this isn't always true.
What you do is you choose the dollar amount you wish to invest.
Normally CD's require a minimum of $500.00
Then, you choose the term. Ask yourself how soon in the near future will you be needing the funds.
When you do decide on the amount and term a bank representative will open the CD for you and as soon as it's opened you must leave the funds in that CD for the chosen term to avoid penalties.
Penalties would depend on the term you chose. For example, a one year term CD might lose a minimum of 30 days of interest not to exceed 90 days whether earned or not.
When the CD matures you will recieve a notice from your financial institution reminding you of the maturity.
At that time you can decide if you want to rollover the CD or close it out. Your institution will give you so many days to make that decision.
If you don't notify your institution, automatically your CD will rollover for the same term as your previous one, but it will be at the new current rate which could be higher or lower than what you originally opened it with.
To sum it up....A CD is a fixed rate investment for a set term of your choice. If you close it before maturity you will be penalized.
It's an awesome product to have though. :)
2007-01-02 15:20:46 · answer #1 · answered by Anonymous · 0⤊ 0⤋
Say you have $5000 you deposit into a CD. The account will accrue interest at whatever % it is currently at. The length of time can range from 6 months, 9 months, 1 year...and so on. If you take the money out prior to the 6 mo, 9 mo, 1 year, etc you will be penalized with a fee.
The best way I suggest going is opening up a high-yield online savings account. Emigrant Direct and HSBC Direct currently are offering 5.05%. Just as competitive as CD's, but you don't get penalized for taking out the money. They are similar to a checking account. They are both legitimate sites and are both FDIC insured.
2007-01-02 06:18:59 · answer #2 · answered by Anonymous · 0⤊ 0⤋
You would have to read the contract. All banks have different rules for Cd's.
So have interest compounded daily on the total balance, some monthly and some a fixed amount you receive only at the end of the term.
They mostly all have an early withdrawal penalty. It could vary from loss of interest for the months not left in, or all of the total interest. Still others will take the interest AND some of your original principle.
You need to talk to the bank and get all of the facts.
2007-01-02 04:26:22 · answer #3 · answered by Dog Lover 7 · 0⤊ 0⤋
If I put $20.000 on a CD how much I will be making in interest?
2016-04-05 03:10:30 · answer #4 · answered by Rory and Mini 1 · 0⤊ 0⤋
It must be kept on deposit for teh prescribed time. If withdrawn early yes you will loose some interest
2007-01-02 03:49:53 · answer #5 · answered by golferwhoworks 7 · 0⤊ 0⤋