Should I get a CD and how much will I collect?

Question

For starters, I live with my parents I only have a savings account and I don't pay bills or any insurances.
Right now I have 900 in my savings account, but tomorrow I get paid 250$ paycheck so I will have 1150$ I was thinking about taking a 1000$ CD for a year with a percent of 3.8%. Exactly what does this mean, and how much money will I make after the year is up?
thanks

oh well about how much money on average would be made after a year on a 1000$ CD ?

Answer 1

Just what it says. You cough up $ 1000. After one year, you get it back plus interest. If you want to get the money back before one year, there is usually a penalty to pay in forgone interest.

BTW, 3.8 percent is pretty crappy return. Check around for better returns. Even the on-line banks such as ING or HSHB can do better than that-even without requiring a C/D.

Answer 2

How much you'll "make"- depends on the Interest rate, & the financial institution you get it from. Actually, 3.8% is NOT a very good "rate of return" for a CD. Shop around at different Banks- or get a CD from an Online Bank... Also (another "tip"), DON'T tie up your $$$ for longer than a Year CD just now. The rates across the spectrum (1, 3 & 5 year CD's) are pretty "equal" just now... And once you commit yourself to a particular CD lifespan- you're STUCK with THAT Interest Rate- for the duration. Happy investing! :)

Answer 3

Frankly 3.8 vs 5.5 is only $17 on your $1000 for the year ($1.40 per month), it's not that big of a deal yet.

I would actually suggest looking into a monthly contributing S&P500 Index mutual fund where you can open the account for about $500 and make as little as $50 per month investments (like Vanguard). This will earn you a far bigger return, and provides more flexability in when you can access your money without penaltities.

Answer 4

that's great ! good job saving. i think you can get a better rate. there is a bank by us that pays 6 percent. you can always ask to speak to branch manager of bank and ask him if he can pay you more. they will compete to get your business. you tell them that the other bank will pay you whatever pecent and will they beat that rate. it will be great experience for you to negotiate and this will improve your return . also, do ask the bank if they have any incentives(specials) for new customers. there is a bank by me that is giving away a 400.00 prepaid visa card for new customers that will sign up for electronic payroll deposits. they give 6 percent on 6 months CD. it is worth shopping for a the best bank and it is worth asking them to compete. it is also a good negotiation / experience for you. try to build a relationship with the branch manager/personal banker because someday you may want a car loan/ college loan/ house loan. or advise with how to invest money. only recently, at my age, i learned why i need a money market account and a checking account for household bills. good luck to you. it's great that you are saving ! i attended a financial planning workshop and they said that the average adult doesn't have that much saved by 50 years old for their retirement. Scary !

Answer 5

At 3.8%, you'd make $38 interest for the year.

Check around - you can find a rate that's a little better than that, probably close to 5% or maybe more.