Choosing Your CD Term
CDs or certificates of deposit come with a lot of advantages that savings accounts and other investing methods do not have. First of all, their interest rates are much higher than savings accounts. They are insured by the FDIC, which means your investment cannot disappear the way a stock investment can with a change in the market. They are a safe investment, and one that many people turn to at some point in their lives.
There are several different types of CDs you can choose from. Some come with more risk, like bump up or callable CDs. Others allow you to take almost no risk, like liquid CDs, where you can withdraw as frequently as you want to without penalty. Choosing the type of CD which is right for you is the first step. First time buyers generally tend to buy traditional CDs and then expand from there.
The next step is figuring out what you need it for and therefore how long your CD term should be. Short term CDs, generally lasting one to six months, are good for things like emergency fund savings. You still have frequent access, while still gaining interest. Longer term CDs, generally six months to two years, should be for expenses coming up in the nearby future. The longest term CDs, lasting several years, should be for far off events, like a child’s college education or marriage.
Once you figure out what kind of CD you need, let Fort CollinsBanking Rates help you find the best CD rates for your future investment.
