I'm thinking about getting a bank CD?

Question

What important things should I be aware of?

Answer 1

Make sure those are money you can set aside for several months, as bank charge you penalty for early withdrawals.

You can shop for CD interest rates at http://www.bankrate.com/

I have a 6 month CD with Citibank and I think that's decent. I love managing everything online and Citi is great at that.

If you're still in your 20's and can take risks, I'd suggest you put your money in stocks though. Stocks is the asset class that gives the highest return.

Besides, a 6-month CD yields ~5% APY, minus inflation (~3.5%) your money is only growing ~1.5% annually.

Answer 2

Certificates of Deposit, also known as time deposit accounts are a sound investment. They enable you to invest money with no risk and guaranteed return. You should be aware of the term of the CD account, APR and APY. You might also consider CD laddering which enables you to open multiple CD accounts each maturing at different times with a bonus rate. Also consider liquid CD accounts which allow you to make early withdrawals with no penalties. Finally, you may also want to consider an IRA.

Answer 3

1. Get the highest rate you can find. Two great places to find the best rates are linked to below.

2. Set a reminder for yourself so you can remember to take the money, and not let it get re-invested in another CD.

3. Make sure it's with an FDIC insured institution and never put more than $100k in.

Answer 4

All the things he said, plus INGdirect.com has CDs with 5% interest.

Answer 5

The interest rate, the minimum amount of money to open the account, the term of the account, and the penalty for withdrawing money early.

Answer 6

Quite simple really, the % rate is valid if the $$$ is left in for the term specified. Early with-drawls will result in a forfeit of the higher % rate.