Types of Certificates of Deposit

Certificates of deposit provide an easy way to create a timed investment. Whether you leave it in the bank for six months or five years, you know your CD will continue to accrue interest. The only thing you need to worry about is unforeseen circumstances which would cause you to withdraw money earlier than its maturity date, which could incur fees and result in a loss of interest. The first step in picking a CD to improve your finances is choosing the type of CD which is right for your needs. Los Angeles Banking Rates has put together a list of the most common types of CDs.

• Traditional CD – These CDs offer a fixed interest rate over a set period of time. Banks will frequently have deals on certain time periods with higher interest rates. Some banks allow interest to be added to the principal, allowing interest to accrue on interest. Check for early withdrawal consequences and special deals being offered by your bank.
• Individual Retirement Account CD – These CDs simply are intended to be used to help save for retirement. While their interest rates are usually the same as traditional CDs, sometimes they are higher, and they usually come with less withdrawal penalties.
• Jumbo CD – If you have a principle of over $100,000, think about investing in a jumbo CD. Look carefully to ensure that the interest rate is greater than for a smaller principal.
• Callable CD – Although they usually come with higher interest rates than traditional CDs, Callable CDs have a hidden clause. If interest rates lower, banks can give you back your CD and accrued interest before the maturity date in order to avoid paying the higher interest rate. Look at callable date and maturity date to see if you are getting a good deal.
• Liquid CD – If you worry about not being able to access the chunk of money you will be investing, consider this CD. Liquid CDs offer the opportunity to withdraw your money throughout the CD period. Banks do place restrictions, making you have a minimum balance and placing a limit on the number of times you can withdraw money. Because there is less risk involved for the investor, interest rates will also be lower.
• Bump-up CD – The opposite of a callable CD, bump-up CDs allow the investor to change the interest rate once during their investment period to a higher rate. It is a good choice for the wise investor.

Once you choose the CD which best fits your needs, let Los Angeles Banking Rates help you find the highest CD interest rates on the market.