A CD account (or Certificate of Deposit account) is a savings account that the federal government insures. CD accounts could be a low-risk investment for your savings as they usually offer a higher interest rate if you are willing to commit to a fixed term.
What is a CD Account?
A Certificate of Deposit Account, also referred to as a CD account, is a savings account. It has a fixed term, knows as the maturity date, and a fixed interest rate for the agreed period of time. All funds in a CD account are federally insured, and they don’t usually charge any monthly fees.
In other types of savings accounts, you are free to withdraw or deposit money at your convenience, while in CD accounts, you agree to leave money for a set period of time. You can still access the funds. However you may have to pay a fee to do so before the end of the agreed period. The period of time you agree to leave money in a CD account can vary. It can go from as little as 3 months to as much as 5 years. As a general rule, the more money you deposit and the longer you deposit it for, the bank’s higher interest rate will offer you.
CD accounts are a good way of making money out from savings if you don’t need access to your funds with very low risk.
What Do you Need to Open a CD Account?
The first thing you need to do is identify the type of account you want to open and a federally insured institution that offers this type of account.
After you have identified the best account and the institution, choose the term (how long you want to leave the money in the account for) and how often you may want to receive interest on your savings (this may vary between accounts and institutions). Now you can proceed with opening your account and deposit the funds. And start getting money back in interest for your savings.
Certificate of Deposit Accounts (CD) Providers
View here some banks and financial companies offering certificate of deposit (CD) accounts:
How do you Choose the Best CD Account?
As there are different types of CD accounts, one way to choose the best CD account for you would be to determine how much money you want to deposit for how long, then find the type of account and institution that gives you the higher interest rate the minimum cost. This will ensure you are making the most out of your savings, which is when choosing the best CD account.