The Seven Reasons You Should Invest in a CD Instead of Just Storing Your Money in the Bank
Introduction: What is a CD and Why Should You Invest in one?
A certificate of deposit (CD) is a type of savings account that provides a higher interest rate in exchange for leaving the money deposited within the account to grow over time.
A CD is different from other savings accounts in that it has a fixed term, or length of time, before you can withdraw your money. This means you can’t touch your funds until the end of the CD term.
1. FDIC Insurance
FDIC insurance is a protection plan offered by the Federal Deposit Insurance Corporation that guarantees the funds in your account.
FDIC insurance coverage is limited to $250,000 per depositor, per insured bank, for each account ownership category. For example, if you have two accounts at the same bank, each with $150,000 in it and you are an individual depositor not acting as a trustee or fiduciary of an estate or trust with respect to either account, then FDIC insurance covers up to $250,000 for each account ownership category.
2. Guaranteed Rate of Return over 4-5 Years
Banks offer CD rates that are much higher than what you can get on a savings account. However, CD rates vary from bank to bank, so it is important to compare CD rates and find the best CD rate for your needs.
The first thing you should do is compare different banks and find out their best CD rates. You can use a website like Bankrate to help you find the best national cd rates or use a financial advisor to help you figure out which bank has the highest CD rate in your area.
The next thing that you should do is decide how much money you want to put into a certificate of deposit. Generally, this amount is at least $10,000 because most banks require this minimum amount in order for them to offer their best interest rate.
4. Potential to Earn Higher Returns than Other Investments with Greater Risk Levels
The convenience of automated payments is one of the biggest benefits of investing in CDs. You can have all your money deposited into a CD and then forget about it until it's time to withdraw it.
CDs are a good investment for people who don't want to spend their time managing their investments but still want to earn more interest than they would with a savings account.
Bank CD Rates - Everything you need to know
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Interest in bank cd rates over time
According to our data there has been a growing interest in bank cd rates over the past few years. We estimate that there have been over 129,075 search engine searches in the United States in 2023 alone.
