Different Types of CD Accounts

A certificate of deposit (CD) account is the U.S. reference to time deposits, which is a financial commodity given to consumers by credit unions, banks, thrift institutions, and other financial institutions. While mutual funds, stocks, and equity funds are the most popular finance saving tools in the U.S. market, certificates of deposit represent a healthy alternative to these tools.

Certificate of deposit accounts is a type of saving account that is virtually insured by the bank. Certificate of deposit accounts is a fixed term account that ranges from three months and six months to one year and all the way to five years and longer. Certificate of deposit accounts are withheld from the account owner until the account reaches its maturity. Unlike other saving accounts, certificate of deposit accounts are harder to withdraw from before their maturation period, although you can withdraw from the interest accrued on the savings in some cases. Banks offer certificate of deposit accounts as a secure savings tools for people who are not looking to move their money quickly. Certificates of deposit are also created by banks to control account holders from taking too much on their savings plan, so they can maximize their earnings.

Certificate of deposit accounts usually have a higher interest rate than other savings instruments. This is because account owners agree that the money be kept in the bank for a certain amount of time. Certificate of deposit accounts can be fixed rate or variable rate. Consumers can also bump up the interest during its term.

Modification to certificate of deposit accounts includes callable certificates of deposit and brokered certificates of deposit. Callable CDs allow banks to call back the deposits much like refinancing a mortgage. Brokered certificates of deposit can be sold for a profit by the account owner. The value of brokered CDs will depend on the expected yield.

High Yield Savings Accounts

Savings are always good, but high interest savings accounts are better. As the name suggests, this type of savings account offers you higher returns on the same amount of money, when compared to a regular account. This means you are making our money work and earn for you. What can be better than that?

It does not matter to what type of socio-economic background you belong, when it comes to saving the only thing that is important is that you have a fall back financial outlet, which when not in use grows by itself literally. The high interest savings account offers a lot more than a regular savings account. Some of them are:

1) Higher Interest Rates – the first thing worth mentioning, is of course, the better rates of interest offered by high interest savings account. Besides the fact that the rates offered are better, these would be compounding, which often provide a very strong incentive for saving more. Since this money is earning for you, you would be inclined to add to this account as much as you can; it would be a de-motivating factor for spending or splurging of excess cash, as you would always be tempted to compute in your mind how much would that be worth in the high interest savings account.

2) Imbibe Financial Discipline – in ordinary circumstances, one should be able to save about one tenth of their income. If you could save more, it would be great; however, putting aside every month 10 percent of your income would require financial discipline, which would serve you well in the end.

3) Emergency Fund – a savings account is meant to act as a personal reserve ‘bank’. You would always have a place to borrow from, without any questions asked. In times of major troubles such as the loss of a job, a death in the family, an accident or sudden medical complication, you need not fret for money. You would just take the money you need and replace at a later date when you have it.

4) Security against Loans – you could use the high interest savings account to obtain secure credit cards, which are often better than regular credit cards as it ties up the amount that is used to the money you make available. In this way, you would not be tempted to overspend or fall into unmanageable debt. By the way, credit card debt is one of the major reasons quoted in bankruptcy and poor credit score all over the world, not only in USA.

5) Mental peace – the most important among all the benefits of high interest savings account is that it gives you mental peace. You are safe and secure; ready for any eventuality life would throw in your path, because you have money that you could use anytime you needed it.

Investing in a Certificate of Deposit Accounts

Any money investment process involves benefits as well as downfalls, certificate of deposit accounts are not exempted to these concerns. When you invest your money in any bank or financial institution, there are risks no matter how small.

CD account investors may say that there are zero risks involved when investing in their preferred banks. Maybe so, but not all people are lucky enough to understand the full mechanics of this type of investment.

As a client, you are free to choose your investment tenure or term, and the interest rate that is available from your choice of bank. The mistakes and downfalls in investing in certificate of deposit accounts can be accounted on the final decision of the client before his/her funds were locked in under a specific term and rate.

Certificate of Deposit Accounts - What To Avoid

• Cashing in your funds before maturity date. It is important that every investor/client understands the importance of maturity date. If you cash prior to the maturity, you can lose up to 6 months interest payments. This is the penalty for early or premature withdrawal of funds.

• Expecting high interest from a low CD fund. This issue may not be a big deal for some, but for other people who expect too much from CD accounts this could be a little bit confusing for them.

If you want to earn higher interest from a CD account, you should start with at least $5,000 in deposits. If you are expecting too much from a $1,000 deposit, you should look for the highest interest rate and deposit it longer as well.

• Not understanding the terms and agreement with the bank. It is a crucial step to take note and understand all the terms and conditions to avoid the major mistakes and downfalls in investing in certificate of deposit accounts. Violation of these terms can lead to headaches and losses in funds.

Take your time to talk to your bank prior to signing up and depositing your money. If you encounter any issues with the agreement, it is impossible not to incur any penalties or expense along the way. It is best to make appointments with your bank to further discuss your plan of investing prior to signing any document with them.

• Investing in callable CD’s. If you have invested in this type of CD account, you could experience being stuck and cannot do anything about your funds. You need to understand that there are risks with callable CD’s and some institutions take advantage of clients’ vulnerability.

• Buying from a broker. A brokered CD is quite tricky and it poses risks. It is an added concern to invest into something that involves another party. The level of trust is sometimes compromised here.

What You Can Do To Avoid The Mistake And Downfalls

When there are downfalls, there are also ways to avoid them. The first thing to remember is to avoid any CD rate that sounds too good to be true. If you get offers with interest rates that are far higher than what the entire market offers, think twice about it.

You can also avoid mistakes and downfalls in investing in certificate of deposit accounts through understanding the maturity of your funds and whether or not it can be called for on or before the maturity date.

Understand the mechanics of a brokered CD first before delving into the issue. It is better to invest your money in a direct manner such as going personally to the bank and talking to the manager.

5 Costly Checking Account Mistakes To Avoid

Checking account mistakes can be avoided as early as prior to having an account. There are many ways to prevent and avoid these costly mistakes that can destroy your business or your reputation.

If you are about to open a checking account from a bank, do not be discouraged of the possible concerns and issues that may arise. It is important to know the most common mistakes and their possible solutions in order for you to avoid them. Every responsible bank account holder is cautious and hands-on to have full control of his/her account. This is one of the keys to succeed in keeping a clean slate when it comes to checking account ownership.

Top 5 Checking Account Mistakes And How You Can Avoid Them

1. If you have a checking account that also serves as a savings account, avoid making ATM withdrawals from banks other than your own bank. There are fees for every transaction if you are withdrawing from a different bank- i.e. your bank is Citibank and you have withdrawn from HSBC. These fees can deplete your checking account in no time, thus leaving insufficient cash to fund your checks.

The fees are not reversible and usually they are higher than those of your own bank, if ever they charge you. Normally your bank will not charge a transaction fee even if you withdraw from another branch. If you can maintain not to withdraw from another bank, you will be saving hundreds of dollars in fees.

2. Issuing bouncing checks is another top checking account mistake. This occurs when there are not enough funds in your checking account causing insufficient amount of cash for the checks you have issued.

The fees that will be charged to your account can deplete your funds. Bouncing checks can also destroy your credit history.

As much as possible, if you are not sure of your own funds, you may issue post dated checks to be on the safer side. You may also get an overdraft protection for your checking account.

3. If you do not keep a balanced checkbook, you are making a big mistake. The correct equation to balance your checkbook is to subtract all your checks to your balances. Most people make the mistake of adding the checks to their balances.

Any mathematical error that involves money in general is a huge mistake. In the case of checking accounts, writing a check should deplete your balance instead of increasing its value.

4. Automatic withdrawals are also a no-no. What makes it worse is failure to monitor each auto withdrawal. You need to remember that checking accounts always need sufficient funds especially if you issue checks on a regular basis. Automatic withdrawals can incur fees that can rake your funds as well.

The best solution is to cancel all your auto withdrawals. If you can’t do this, separate this account from your checking account to avoid continuous depletion of your checking account funds.

5. Trashing your bank receipts is the final top checking account mistake that you should avoid. Even though banks use automated and savvy systems, you can never tell when system errors will occur.

Keep your bank receipts so you can compare them with your bank statements. Any error can be detected easily if you have your own reference. You will also need them during tax season.

High Interest Savings Accounts

High interest savings account may sound impossible to some people, particularly those who do not believe in the value of having a savings account. Whether you have one or not, it is important to take into consideration the many benefits of having some savings. Knowing and getting more from the usual savings account will surely ring a bell even to some unbelieving folks.

Saving some money for a rainy day is already cliché, but the lesson here is more profound than what most people think when it comes to saving and managing their finances. Often times people find it hard to open a savings account simply because their earnings are not enough. Some people simply find it hard to budget their money even if they have enough salaries. Simply put, no matter your situation is, you should try to save for any unexpected expenses.

If you can maintain a savings account, you might as well consider high interest savings accounts as options to increase your money’s power over time. You may start with one savings account and sufficient fund that is worth at least 6 months.

There are certain banks that offer competitive savings account interests. But if you look for online banks, the odds are higher than land-based banks. Rate offers differ from bank to bank, so it is important to look for several banks to compare their rates.

What Benefits You And The Bank

When you choose an online bank with a purpose of availing a high interest savings account, you are not only making a wise decision for yourself, but you are helping the online bank as well.

• Banks need people to manage their business transactions every work days. Online banks need the same management support as land-based banks. The main difference is that online banks have automated managing systems that do the transactions for them.

With this innovation, the bank can lower their overhead costs, thus making it possible for interest rates to improve. These automated systems have features that can be directly used by online customers.

• You can find free online savings accounts. The online banks that offer this type of savings normally have no minimum or maximum deposits. There are also no fees deducted from deposits and withdraws; thus making it possible to earn more interest over time.

• Better service can also be obtained when you choose an online bank. Compared to land-based banks, online banking is fast and you are sure to be served on the spot. Online banks provide this to their clients with the goal of maintaining a client base. The more clients these banks have, the more reason to have high interest savings account offers.

There are many other factors that can help benefit you when obtaining high interest savings account. May it be a land-based on online savings account, you can be sure to get one that is right for you and your budget; just make sure to look for options and compare before you open an account.

Opening a CD (Certificate Of Deposit) Account

If you’ve always wanted to invest your hard earned cash, it is advisable to try looking at different options such as opening a certificate of deposit account. But before you give it a go, there are a few things that you need to consider. These are the factors that can help you make a final decision.

First, you need to know what a certificate of deposit account is. Commonly known and abbreviated as CD, it is a way of investing money either on a short or long-term period to gain profit through interest. Financial institutions such as banks offer the facility for CD accounts.

Your investment money is important to you and also to the bank since it will also gain profit as you gain profit over time. A CD is an alternative way to keep and invest money. And compared to a regular savings account, a CD requires a specific lock in period in order to earn interest; hence, the higher interest rate. Withdrawals during the lock in period can incur penalties, unlike a savings account where it is a regular transaction.

Opening A Certificate Of Deposit Account - Top 3 Essentials

Here are the crucial factors that can help you understand further before opening a certificate of deposit account:

1. Where to get a certificate of deposit account. First and foremost, you need to determine where you want to invest your money. Of course the only avenue is through a bank, but there are also third party interventions such as brokerage firms that will offer you this option.

If you are to ask some financial counselors, the best place to invest is directly through a bank. Whether online or offline, you should choose a bank and discuss your options with them personally. This also helps in maximizing your interest rate because if you choose to have a broker, part of your CD rate will be credited to them as fees.

2. How much deposit to invest. If you aim for higher interest rates, you can start with a $5,000 deposit and onwards. You may ask your bank about the minimum and maximum deposit amounts to help you out. Different banks offer different min and max deposits.

3. Tenure. You can find a CD account that calls for 3 months up to 48 months tenure. As a rule of thumb, the longer the tenure, the better for your investment money to gain more profit. However, be aware of the ever changing interest rates and bank policies.

You can stick with your initial bank provided that it can facilitate your investment an automatic renew with auto interest application. That means whenever there is a change on interest rate, it will be applied to your CD account upon renewal. If this is not available, do not avail an automatic renewal.
You may transfer to a bank that offers higher interest rates, but it is only advisable to do so after the termination of your term, otherwise you will be penalized with a fee for premature withdrawal of funds.

What is a Money Market Mutual Fund?

A market fund that pools deposits from several individuals to be invested on short-term government securities, banks certificates of deposit, and high quality corporate debt. Interest is paid back to the investors from the income takes from the pool of of money. In a money market mutual fund, each share maintains a constant value despite income and yield fluctuations. This results in no capital gains or losses. The fund’s yield vary as interest rates rise or fall since these funds are reinvested on a continuous basis.

What is a Negotiable Certificate of Deposit?

A type of certificate of deposit usually pegged at a higher face value of $100,000. An NCD is guaranteed by a commercial bank to be sold in derivative or secondary markets. However, NCDs cannot be cashed before maturity. Due to the large face value of NCDs large institutions primarily handle NCD as a low -risk and low-interest security option. Negotiable CD is an alternative avenue for money markets.

Highest Certificate of Deposit Rates

Here are this week’s best CD (certificate of deposit) rates.

FNBO Direct Bank Reviews

FNBO Direct shocked the banking world in 2007 when they launched an aggressive campaign promoting their 6.00% APY online savings account.

This promotion gained them over 1 billion in consumer deposits as online savvy bankers flocked to take advantage of the high interest rates.

Recently, reviews of FNBO Direct have been very positive. Although their rate has dropped to 5.00%, this still puts them very near the top of the market leaders. They are currently second only to OneUnited Bank.

Derrick from Omaha suggests this bank because the online bank transfers are extremely fast and the banking interface is very user-friendly. Customer service is top notch.

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