If you are interested in a CD, it’s helpful to understand how they work and what type of interest you can expect.
CDs are straightforward, and you can open a new account or transfer funds from an existing account into a CD.
CD terms vary from a few months to years, and you can’t withdraw your money until the term ends, except by paying a penalty.
CDs offer protection against market volatility – the Annual Percentage Yield (APY) remains the same until maturity.
Longer terms typically offer higher interest rates, although this may not always be the case in today’s unpredictable market.
Once the CD matures, you can renew it, withdraw it, or move it to a different account. Be sure to have a plan before the expiration date, as some CDs will automatically renew.
If a CD sounds like a good fit for you, you can explore options online or check the table below.
In March 2023, CD interest rates range from 3% to 5%, depending on the lender and term. Compared to traditional savings accounts, which currently offer a 0.33% interest rate, CDs offer a higher return.
For example, with a $5,000 deposit, a traditional savings account would earn $16.50 in a year, while a CD at 4.5% would earn $225.
If you earn $10 or more in interest, you will need to deal with tax reporting items when filing your taxes, so make sure to have all necessary paperwork.
In an uncertain economic climate, CDs offer a reliable way to protect and grow your money. With different rates and lengths available, you can explore CD options online or at physical locations of lenders.
Start earning more money today by opening a CD with a favorable interest rate.
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