CD Rates (Certificate of Deposit Rates)

Sponsor Online Savings and CD Offers

CD Rates:

3 Month CD | 6 Month CD | 1 Year CD | 18 Month CD
2 Year CD | 3 Year CD | 4 Year CD | 5 Year CD

A Certificate of Deposit (CD) is a time deposit issued by a bank earning a specified interest rate over the period of time you select, based on available options. CDs are issued with varying maturities and rates by institutions such as state or national banks or state or federal savings and loan institutions. Certificates of Deposit require committing money to an account with a financial institution for a designated period of time and are ordinarily FDIC insured. The best certificate of deposit rates are often available for sums as little as $500. CDs are one of the bedrocks of the banking world and come in many different sizes and shapes.

While most Certificate of Deposit rates are nationally advertised, it may be possible to get higher CD rates by auctioned CDs. Zions Direct, for example, manages CD auctions on behalf of FDIC-insured banks.

CD Terms

Certificates of deposit come in various terms with the rate generally rising with the length of the CD term. As a result, a 5 year Certificate of Deposit will generally provide a higher rate than a 3 month CD.

3-month and 6-month Certificates of Deposit do not offer returns that dramatically exceed those in online savings and money market accounts, money market funds and auction rate securities. 1-year certificates of deposit offer a significant rate premium over shorter term CDs and many other cash equivalents, and there are small incremental gains to 2-year and 3-year CDs. However, investors in higher tax states may find that the actual premium in these securities over state and local tax-free agency bonds or US Treasuries is small or non-existent.

While longer term CDs usually pay the highest cd rates, they also require investors lock their money up for an extended period of time. Longer term CDs therefore have significant risk of raising interest rates. If investing in longer term CD, you should review redemption conditions; some CDs can be redeemed before expiration with a significant penalty.

CD Laddering

Investors can also build CD Ladders, which allow investors to diversify their portfolio with a range of cd maturities. This provides investors with a steady stream of guaranteed income and reduces interest rate risk.

Brokerage CD

A brokerage CD is a Certificate of Deposit sold through a brokerage like Fidelity, Charles Schwab, or TD Ameritrade. Banks issue large blocks of CDs to brokerages, who then break the blocks up to re-sell to their customers. Because the brokerages purchase the CDs in large blocks, they are able to negotiate higher CD rates than an individual customer can get from a bank. The brokerages generally re-sell the CDs to their customers without fees.

CDARS

The Certificate of Deposit Account Registry Service allows CD depositors to receive up to $50,000,000 in FDIC insurance. It does this by breaking the deposit into smaller amounts that are under the FDIC limits and spreading it to other participating FDIC insured banks. CDARS can often provide competitive CD rates.

Next: Certificate of Deposit (CD) Advice and Pitfalls

Financial products of all nature bear inherent risks and this website is not a financial advisory service; it is a forum for users to share and to compare notes and observations on financial publications. The website provides, free of charge, the technical and logistical apparatus and the medium for users to share and to publish financial information and to comment on publications. As such, the website’s operator can not and does not take responsibility for information, observations or opinions of any sort or nature provided by third parties with whom it is not affiliated who use the website to publish, to comment or as a means of solicitation. Users are specifically warned against following any advice related to specific instruments, including, but not limited to, equity securities, that may be provided by other users directly on this site or on web pages to which other users have provided links on this site. BestCashCow.com can not and does not check or verify the qualifications and credentials of users who publish or comment on this site or on linked pages. Users should seek personalized advice from qualified professionals regarding all personal financial issues and evaluate the risks and applicability to their own circumstances of each financial product discussed regardless of who the publisher is or purports to be. Should you, through your use of this site, identify an individual or organization purporting to offer personalized advice, you bear all responsibility to ensure that the individual or organization has the qualifications that they may represent on the website, and that their advice is appropriate for your circumstances. On certain webpages, BestCashCow.com provides information related to rates on US-based savings accounts, CDs, short-term government bonds, and other US cash equivalent securities, also free of charge to internet users for their independent use. The accuracy of this information is not guaranteed, and the information, like all other information on this website, should not be construed to provide investment advice, nor to endorse a financial product of any sort.

© 2009 BestCashCow.com, LLC. All Rights Reserved. Terms under which this service is provided to you. Privacy Policy.