Which Bank Offers the Best CD Rate?
When it comes to banking products, one of the best ways to save while ensuring the safety and security of your deposits, is through a CD or certificate of deposit. Among low risk banking products, CD rates are some of the most competitive in terms of the return you get. So, how do you find out which bank offers the highest CD rates? Keep reading for all the details to help you get a competitive rate in today's market.
How Are CD Rates Calculated?
CD rates are determined based on how much the bank can afford to pay you in interest, while being able to make loans to others. The difference in the banks’ interest rate on loans, versus how much you earn in interest is the profit the bank needs to be able to keep lending. You are agreeing not to touch your money for a set amount of time, during which the bank will use your money to make loans to others. In exchange for this flexibility, the bank pays you interest. Of course, since millions of transactions are conducted on a daily basis, you still have access to your funds should you need them. However, you will pay a penalty for early withdrawal, which may include all the interest you have earned up to that point.
The Effect of the Economy
Generally, when the economy is doing well, rates are higher. When economic growth is slower, rates are lower, making it cheaper to lend money and prevent inflation. Of course, that doesn't mean you can't take advantage of better CD rates. You just have to know where to look. There are Web sites which allow you to comparison shop current market rates and find the best deal among the many banking products available.
Getting a Great Rate
One bank which pays competitive CD rates is Aurora Bank (Equal Housing Lender, Member FDIC). As an example, they allow you to buy a CD with a minimum deposit of $1000 and term lengths ranging from six months to five years. You don't need an account at a bank to be able to buy a CD. This lets you take advantage of better CD rates, no matter which bank is offering them.
If you're worried about not being able to access your money if you need it or losing all your earned interest and penalties, you can do what's called “laddering” your CDs. This involves buying several CDs using different deposit amounts and term lengths so that you will always have reasonable access to your funds at different times. Buying one or more CDs is a great way to grow both short-term and long-term savings in a secure and safe, low risk environment.
Jess Hall writes out of Jersey City about different investment opportunities, including how to get competitive CD rates from Aurora Bank. Looking to stay up to date with the happenings on her bank of choice she tends to visit http://www.facebook.com/#!/pages/Aurora-Bank-FSB/168482126522389 more often than not. Read more at http://www.facebook.com/#!/pages/Aurora-Bank-FSB/168482126522389
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