| Many people tend to look for a low-risk investment | | | | rate of interest and give you a less rate. |
| option for money, and hence turn to certificates of | | | | 6. Contrary to earlier, CDs these days have been |
| deposit (CD) in order to do so. If you would like such | | | | complicated with variable rates of interest which |
| an investment, consider the following points so as to | | | | change depending on how long the tenure of the |
| be fully aware of what you are getting into. | | | | deposit is. |
| 1. A CD is a type of deposit account that offers a | | | | 7. If you have a long term CD, the banks have a right |
| higher rate of interest compared to a normal savings | | | | to terminate the CD if the interest rates fall. However, |
| account. | | | | if the interests rate rise, you will still get the lower rates. |
| 2. CDs are covered by a federal deposit insurance up | | | | 8. When picking a CD, consider your financial goals and |
| to $250,000. | | | | ensure that your choice meets your goals. |
| 3. When you purchase a CD for a fixed period of time, | | | | 9. Understand potential pitfalls - these include the |
| the bank pays you an interest periodically. You also | | | | difference between the call period of a CD and its |
| have the option of collecting the interest accrued at | | | | maturity date. Be clear with all terms and conditions on |
| the time of maturity of your CD. | | | | your CD. |
| 4. Early cancellation of your CD has a penalty applied | | | | 10. Research any penalties and any other charges that |
| on it. | | | | might be applicable before hand so that you wont get |
| 5. There are many deposit brokers in the market. | | | | rude shocks later. |
| These brokers will negotiate with the bank on a higher | | | | |