Which one should I pick?
2007-03-05 14:10:58 · 6 answers · asked by Titainsrule 4 in Business & Finance ➔ Personal Finance
OMG! Are you really that stupid?!
2007-03-05 14:16:03 · update #1
I want to thank every one after the first answer.
2007-03-05 14:17:56 · update #2
With a bank account you can add or withdraw money at anytime, a CD or Certificate of Deposit is more like you giving a loan to the bank for a specified period of time. With a CD you normally receive a better interest rate because you agree not to withdraw the money before X date.
2007-03-05 14:16:32 · answer #1 · answered by That Guy 5 · 0⤊ 1⤋
Both accounts will gain interest. But a CD has a higher return. CD's have term though. Usually in 3 month increments. The longer the term, the higher the interest. The disadvantage, or advantage depending on how you look at it, is that if you take the money out before the term has ended you will be penalized. If you don't take the money out at the end of the term, it will automatically roll over for the same interest rate.
If you do take out a CD, keep an eye on interest rates the week your term is to mature. During that week, you can renegotiate your interest rate, or transfer your CD to the better interest rate.
If you are planning on putting a large amount into CD's i would suggest creating several separate CD's. i would take out 1 year terms and stagger them 3 months apart. By doing this, you will have a CD that matures every three months. Then If, for some reason, you need to cash a CD, one will always be available shortly.
2007-03-05 22:35:17 · answer #2 · answered by B H 3 · 0⤊ 1⤋
The only really difference between a CD and savings account is that you are guaranteed a higher interest rate with a CD, but it is locked in for a certain time period, so there are penalties if you withdraw the funds early. Both of them stink when it comes to interest rates, however. I would suggest you invest in a solid mutual fund. The interest rate is not guaranteed, but the opportunity for your money to grow is way greater. They are safer than stocks and you can get the funds when you need them. Ever since mutual funds have came into existence, not one has ever went bankrupt. Besides that's all the bank is going to do with your money. They'll make anywhere from 10-20% from investing it and only give you a small part. That's why they can guarantee you 3-5%. You might as well invest into mutual funds yourself and get all the proceeds. Think about it.
2007-03-05 22:23:28 · answer #3 · answered by bernard 2 · 1⤊ 2⤋
In a savings account you can put in and take out money at your discretion as often as you want. In a CD your money is "locked" up and you can't take it out for a set amount of time, usually 3,6, or 12 months or 5 years, whichever you choose. Savings accounts at banks usually pay very little interest, however, some online offer up to 4.5% (ING Direct). CD's usually offer around 5% interest.
2007-03-05 22:18:20 · answer #4 · answered by k_hart100 3 · 1⤊ 1⤋
If you need to access the money whenever you want, go with the savings account. A CD is a Certificate of Deposit that has a date of maturity, that is how they can guarantee a certain interest yield. There is almost always a penalty for early withdraw.
2007-03-05 22:16:34 · answer #5 · answered by smoothie 5 · 1⤊ 2⤋
A savings acocunt you can put money in it and save it.
A CD is something you put in a CD player and listen to.
2007-03-05 22:14:20 · answer #6 · answered by ♥eLizAbEtH♥ 5 · 1⤊ 7⤋