A certificate of deposit, more commonly known as a CD, is one of the safest forms of investment available. Of course, safe investing has a price. Certificate of deposit rates of interest tend to be much lower than those of other investments. The best way to get good certificate of deposit rates is to shop around. Take the time to research CD providers and become familiar with what they have to offer.
A CD is a short-term investment, usually six months to five years, offered by a bank or other financial institution. The mechanics of a CD are fairly simple. You, the investor, give the bank some money. The bank agrees to hold on to that money and then give it back to you after a predetermined amount of time. It will also give you the interest that has accrued on the money during that time.
Certificate of deposit rates of interest tend to be higher than the average savings account rates but lower than could be gained through other investments. Rates change depending on the market at the time the CD is created. Once the rate has been set, it usually remains the same for the life of the CD, so it is in your best interest to find the bank with the highest certificate of deposit rates before making the investment. The best way to do this is by shopping around.
Many people try to do all their banking and investment through one or two financial institutions. This makes managing accounts easier, but may not result in the lowest certificate of deposit rates. Start by calling banks in your area or going to their websites to see what rates are available in your area. Then go online. Many websites list current interest rates for banks across the country and rank banks based on the interest rates they are offering.
Be aware that the amount of money you plan to invest may affect your certificate of deposit rates. Since a CD means that the bank can depend on having a set amount of money at its disposal for the length of the investment, it is in the bank's best interest to offer you a higher interest rate to encourage longer investments. The amount you invest may also affect your rate for the same reason. The more you invest, the better your rate will be.