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Certificate_Of_Deposit_Accounts

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					Certificate Of Deposit Accounts



Certificate of Deposit accounts are a very safe environment for you to
put your money in. Learning more about CDs is a great idea if you want to
make your money work for you while keeping it safe.

There are two things that you need to know about CDs right up front. One
is that they require you to leave your money in the bank for a certain
amount of time. The other is that they generally have a higher interest
rate than other savings accounts.

If your bank has a good interest rate on their CDs, this is great! You
can keep all of your money in the same bank. If you aren’t sure whether
your bank has a good rate, don’t be afraid to do some shopping around.

When you open a CD you will be given an option of how long you want to
leave your money in the account. Anywhere from three months to six years
are normal options. Generally, the longer period of time that you choose,
the higher rate you will be given.

The reason banks do this is because if you give them   you money to hold
and you promise to not take it out before the end of   the term, they can
take that money and invest it. This makes them a lot   of money. So, they
are willing to offer you a high interest so that you   will choose to leave
your money with them for a long time.

Another requirement that banks generally have for opening certificate of
deposit accounts is a minimum deposit. While this varies from bank to
bank, an amount such as $500 is not unusual. While you have your CD, you
can add more money to it. These requirements will be gone over before you
actually open the CD, so you will know exactly what to expect.

Something else that you need to find out when talking to the bank is how
often interest is paid out on the money in their certificate of deposit
accounts. Many banks pay interest monthly, but others might pay
quarterly. Find out if the interest compounds as well. Compound interest
is great because you get money for interest that has already accrued in
your CD.

A lot of banks will give you the option of having the interest deposited
into another account, such as your checking, but if you are trying to
make and save money this isn’t recommended. Letting the interest add up
and compound can make quite a bit of money over time. Also, if you choose
to take the interest out, the bank might not give you the best interest
possible.

After the agreed-upon time period is up, certificate of deposit accounts
reach “maturity” and your money is available to you again. You will
usually have 10 or 15 days to decide what to do with your money before
the account “defaults.” See what the default is when you open the
account. For most banks it is to roll the money over into an identical
CD.
Look into certificate of deposit accounts and see if they seem like an
investment method that is right for you.

				
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