How to Invest in Certificates of Deposit

One of the best ways to make and save money is to open a high interest Certificate of Deposit, better known as a CD, at a bank.

Opening a certificate of deposit is not difficult, in fact you can even do it from your own home! Many banks, if not all, offer online banking in this day and age, and so anything that has to do with your personal financing can be done from the comfort of your own home.

What is a CD – Certificate of Deposit?

A CD is an account that you put money in, and for a chosen amount of time, you cannot take that money out without incurring certain fees.

This is a good idea for people who would like to save money, but are not very good at not spending the money they have. For example, if a person is given a large amount of money as part of a refund or rebate, they can put a chunk of that money in the CD, and live off whatever is left.

Rather than just putting the money in a savings account where it is easily accessible at any time, a CD forces a person to rethink if they can really afford an item, and if they cannot hold off on the purchase of that item until they either have more money, or their CD expires.

In this way, it forces people to think about their purchases, because they will not want to lose money by paying the fee that is charged if they take out money from their CD before it expires. However, the person still has control because they can choose how much money they will put into the CD, and how long they want the CD to last.

Also, if an emergency arises, they can always take the money out, because usually the fee is a few month’s interest; nothing too drastic. If this is the first time using a particular bank, it takes a few days after you’ve applied, to clear your information and for the bank to send you the information in the mail or by email.

After you have been approved, you are given the choice as to what kind of certificate of deposit you would like. Currently there are many different kinds of CDs, including high interest CDs, no penalty CDs, and raise your rates CDs.

With high interest CDs, you have the option of choosing the length of time you will put your money away. Usually, the more time you choose to have your CD last, the higher the interest rate. For example, the rate of a five year CD is much higher than the rate of a six month CD.

Depending on your situation, you can choose to put a large amount of money away for a long time, or a small amount of money away for a short time. The good thing about CDs is that it keeps your money in a place where it can not be easily withdrawn, and they have higher interest rates than most savings and checking accounts.