Wednesday, September 28, 2011

Finding the Highest CD rates

Have you ever used a CD as a savings vehicle?  Back in our early marriage, my husband had a retirement account with an employer and when he left, he received the proceeds in cash because it wasn't enough to warrant a transfer to a different institution.  This concerned us because we knew we'd be liable for taxes on the proceeds and wanted to make sure that we had the money to pay the taxes due when the time came.  We searched around and found a bank that offered a good rate on a certificate of deposit (CD).

For us, the use of a CD gave us the ability to earn more than a typical savings account rate on money that we needed to invest in the short-term, but we could have easily have rolled the CD into a longer-term if that suited our needs at the time.  When you are searching for the Highest CD Rates, it is important to broaden your mind set and seek out trustworthy online banks, like Discover Bank.  Yes, they are affiliated with Discover, the well-known credit card company.

Since I purchased that first CD more than a decade ago, online banking has really come into its own.  Back then, I would have hesitated to place my money in the care of an online bank instead of visiting a local bank for my investment needs.  Now, I would not hesitate in the least because I firmly believe that the internet has opened up the whole world - investment world - to me.  I want the best bang for my buck and that means I need savings vehicles that offer a good rate of return.  Just like brick and mortar banks that are FDIC insured, you can find online banks that are also backed by the FDIC.  You can confidently shop online for a product that meets your needs and provides a great rate of return.

Why use a Certificate of Deposit? That's easy.  They're a low-risk investment and, according to the site, they offer a higher rate of return than a run-of-the-mill savings account.  If you are unaware of how a CD works, you open a CD with a set amount of money and for a set term.  Tip:  Sometimes the longest term doesn't offer the best rate.  Think about how long you want to tie up your money, because there are early withdrawal fees if you need your money before the term expires.  CDs are great for short-term investments and can help protect your nest egg if you're nearing retirement age by providing a lower risk investment opportunity that has a guaranteed rate of return.

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