Qay’s Business Guidelines

If you are looking for a low risk, short-term way to invest your money you might want to consider a Certificate of Deposit (CD). A CD is similar to a savings account in that it allows you to save money while you earn interest on it but because you can not withdraw your investment at will it is a much better option. They key to getting the highest return on the money you invest is to get the best certificate of deposit rates possible. A higher interest rate will yield higher earnings.

In many cases you will find that a broker will offer you the best CD interest rates. There are a few drawbacks with going this route. For one, they frequently require a much larger investment amount than a bank or a credit union. Often times they require a minimum investment of $10, 000 or more. Secondly, the risk is higher when you purchase from a broker because they may or may not be insured by the Federal Insurance Deposit Corporation (FDIC). You always have the option of specifically requesting an insured certificate of deposit or if the risk is too high for you, go to a bank or credit union. Lastly, brokerage fees can be ridiculously high. Make sure you know what the fees are up front before you purchase. You may find that you are better off going to a financial institution instead because the brokerage fees exceed the amount that you would make from the higher interest rates. (more…)

The most important aspect of a certificate of deposit (CD) is the interest rate. After all, it would not make any sense to invest your money into something that has no return associated with it. It is important to know as much as possible about how interest rates work before you purchase a CD.

The interest rate that you get when you purchase a CD generally depends on several factors such as the amount you invest, the length of time you invest for, and the issuing financial institution that you are dealing with. For example, if you invest the minimum amount allowed for a short period of time, your interest rate will probably be lower. However, if you invest a large amount of money into a long-term CD, there is a good chance that you will be offered a higher interest rate.

In most cases, you will get a fixed interest rate with a certificate of deposit although they are available with a variable rate. With a fixed interest rate you are locked in at the rate that was assigned at the time of purchase. However, some issuers do offer a no penalty feature, also known as a “bump up” feature. This feature allows you one chance to bump up to a higher rate before your maturity date without being assessed a penalty. Normally, the only way to accomplish this would be to withdraw your money early and reinvest it into a higher rate CD, in which case you would be charged an early withdrawal fee. (more…)