A certificate of deposit account is a great way to stash your savings and let them grow. Even though interest yields aren’t as high as they once were, you’ll find that CD accounts are a better option than the regular savings account your brick and mortar bank has to offer. Do you know how to find the best CD account? Read on to find out.
Construct a financial plan.
Before you open an account, think about what you want to do with your money. Constructing a financial plan will help narrow down the search for the best CD account. When you’re outlining your finances, think about what you’re saving for. If you won’t need that money until the distant future, then 5 year CDs would be a good bet for you. Do you think you’ll withdraw at some point? You should use an online early withdrawal calculator to see the impact that early withdrawal penalties will have on your money. By anticipating your potential future needs, you’ll be able to choose a long-term CD wisely.
Looking for high rates? Look no longer.
Certificates of deposit come in different lengths, typically between three months and five years. During that period of time, you aren’t allowed to withdraw any of the funds until the CD has matured. If you do pull money out or close out the account, then you’ll be slammed with a penalty fee and you’ll lose a portion of your interest. You’ll find the best, highest yields in CDs with the longest terms. If you’re interested in seeing the most growth from your money, go for a 5 year CD account.
You’ll find the best accounts online.
Chances are, you’ll find the best CD account at an online bank instead of a traditional bank. Online banks, unlike their brick-and-mortar counterparts, don’t need to charge extra fees in order to keep their branches afloat. You’ll find that most online banks will beat traditional banks not only in their checking and savings account rates, but their CD rates as well. Let’s look at Ally Bank for an example. As of September 2015, they boasted a 2.00% yield for a 5 year CD account. While these rates are subject to change at any moment, you can’t argue that it’s a good deal. Even though you might be wary of an online CD account, you can save in peace knowing that up to $250,000 of your funds are under FDIC protection.
You can also look to credit unions for CD accounts. However, you might choose an online bank instead; while credit unions have good rates, there are stipulations to membership and not everyone can join. Comparatively, online bank accounts are easy to manage and open to anyone. The Navy Federal Credit Union, for example, has a great 3 year CD with a 1.50% APY. However, if you aren’t in the navy, then you can’t take advantage of the opportunity in the first place.