2007-02-27 05:32:35 · 5 answers · asked by Bee 3 in Business & Finance ➔ Personal Finance
A CD has a higher interest rate because you take out a 6 month or 1 year or some time period, that you agree to leave the money there. The longer you agree to leave it, the higher the interest rate. A 6 month CD would pay a lower rate than a 1 year.
A regular savings account has a lower interest rate because you can take the money out tomorrow or next week or 6 months from now.
If you take the money out of a CD early, you pay a penalty and won't get the full interest rate that you would if you waited until the CD matured.
2007-02-27 05:39:54 · answer #1 · answered by Faye H 6 · 1⤊ 0⤋
A cd is a certificate that has a set time that it is locked into a bank or savings institution at a set rate of interest. The interest rates are usually a fair amount higher than a simple savings account. The trade off is that the money you deposit into a CD is locked for a set period of time like 90 days, 1 year etc, in which you cannot take the money out or you forfeit the interest you have earned. CDs are the way to go if you have time to leave the money without needing it.
2007-02-27 05:44:07 · answer #2 · answered by Anonymous · 0⤊ 0⤋
There are savings accounts that have interest rates comparable to CD's. It all depends on if you want to be able to withdraw the money when you want to. You can withdraw from a CD before it matures but there is a monetary penalty.
2007-02-27 06:46:05 · answer #3 · answered by KathyS 7 · 1⤊ 0⤋
higher interest rate, and you are forced to save it because you cannot touch the money during the term of the CD.
2007-02-27 05:41:27 · answer #4 · answered by Jack Chedeville 6 · 1⤊ 0⤋
currently CD is not better. savings accounts have nice yields & it is liquid.
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2007-02-27 06:48:03 · answer #5 · answered by chase11209 2 · 1⤊ 0⤋