CD rates aren’t exactly at their highest right now, so it’s important now more than ever to get the highest possible yield you can. Thanks to the internet it’s a lot easier to get the highest yields around when you can compare high interest CD rates from hundreds of banks all on one website. When banks have to compete with each other for your business in one place you’re going to end up with the highest yields possible in today’s banking market.
There are a few important things you must know before opening a CD. The first thing you must know is that any money that you place into a CD is going to be locked into the account for the duration of the term. It’s not like savings account where you can deposit and withdraw funds whenever you need them. With a CD you have to leave any money you put into the CD for the entire term unless you want to pay an early withdrawal fee which can often times be quite hefty.
A few other general rules about CDs are the more money you put into a CD the higher yield you’ll get. This is because more money allows the bank to make more money off of it. Additionally the longer term you get a CD for, the longer your yield. This allows the bank more time to make money on your deposit and gives them a lot more freedom with options on how to invest your funds.
If you compare CD rates you probably have found that rates are pretty low right now. For this reason you’re not going to want to lock into very long CD terms right now. I wouldn’t lock into any term longer than 1 year. CD rates can’t stay low forever and when they start to climb back up you want to have money available to invest in the higher rates.