C.D.’s ( Certificate of Deposit) Accounts

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C.D.’s ( Certificate of Deposit) Accounts

By ric dalberri

Certificate of Deposit accounts are a an extremely safe safe situation for you to deposit your money in. Educating yourself about C.D.’s is a benefit to you if you want to keep your money safe and sound.
On hand are a couple of facts that you need to know about CDs from the onset. One is they force you to leave your funds in the bank for a particular amount of time. The additional is that they commonly have a higher interest rate than savings accounts.

Most banks want all your money with them. If they are not offering a good rate after you’ve shopped around, speak with an area manager. Sometimes to keep your money with them, they will make an exception. If not, move your money.

As you are about to open your C.D. Account, you will be given an option of the length of time you want to ‘tie’ up your money. Remember, you are agreeing to leave your money in the C.D. For a period certain which can be anywhere from 7 days to 7 years or more.

The rationale banks do this is because if you assign them your money to have and you assure to not take it out before the end of the term, they can take that money and invest it. This makes them a bundle of money. So, they are willing to pay you a high interest so that you will choose to leave your money with them for a long time.

An addition to leaving your money for a certain term, there will also be a minimum amount to open a C.D. Since unlike a savings account, you can not add to it. You can expect some minimum amounts to open can be as much as $1,000.

An additional fact to find out is how your bank pays interest. Is is simple or compounded ( getting interest on interest plus principle). How often does your bank pay. Monthly, quarerly.

Many banks will offer you the opportunity of having the interest deposited into another account, such as your checking, but if you are trying to make and save money this isn’t recommended. If you let the interest accumulate, you can wind up with a substantial amount after the term is up. Also keep in mind if you do take out your interest along the way, you now have a different interest rate. If you leave it, it is APY (annual percentage yeild). If you keep taking the interest out it is known as APR (annual percentage rate) & will be lower. Talk to your banker or accountant about this. Once the agreed upon time frame is up, the money plus interest (if you did not take it out) is now yours to do whatever you want. However, there is a ‘grace’ period after maturity, usually 7 days. So after the C.D.matures you have a certain amount of time to go to the bank and get your money. If you don’t , the C.D. Will renew itself. If you try to get it after it renews itself after the ‘grace’ period, you will be penelaized.