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.
Certificate of Deposit Rates :: Jul.21.2008 :: Bank CD Rates :: Comments Off