Regular Savings

Many consumers have found that putting money in CDs (certificate of deposit) accounts is a good way to earn extra interest on regular savings accounts. Like the savings account that most of us are familiar, the money you put in a CD will bear interest, and generally, it will receive more interest than a savings account. A major difference between a regular savings account and a CD is that the money you put in a CD must remain in the bank or credit union for a period of time to gain the full amount of interest. You can make money on a CD, but you must pay a penalty. The basic rule for the CD is not to use the money you think you need to use before the deadline. In other words, you should only buy a CD if you can afford to leave the money alone the amount of time required. All certificates of deposit has a maturity date. This is the date on which you can withdraw money without paying a penalty. The length of time for the CD varies, so make sure you understand what you are buying. If you need to cash the CD before maturity, most banks charge a commission for early withdrawal. These fees are generally equal to about three to six months' interest, but, again, this can vary, check with the bank. In general, more mature CD's in three months to five years, although 10 - and 20-year CD are also available. The amount of interest offered vary depending on the length of time the CD. Consumers should be aware that CDs are protected under the Federal Deposit Insurance Corporation (FDIC) as long as they have been issued by a bank. This protects consumers against losses should the bank go out of business. Most certificates of deposit will earn compound interest. Compound interest means the interest your money earns is added to the total amount of the CD so the next time the interest is calculated and added, you'll earn more. For those who have extra money and can afford to invest and leave it alone until the deadline arrives, certificates of deposit are a good idea. They are a safe and effective means of earning interest on your money. They may not be as exciting as other forms of investment, but they allow the owner to sleep at night knowing that their investments will not disappear overnight. The CD can be gifts for grandchildren and other family members. If they are purchased early enough, they can be used to help finance the education of future needs as well. Because they can be purchased for relatively small amounts of money, they are often affordable for many families who otherwise might not be able to invest. Most banks and credit unions will have literature you can read to learn more about CD and how they work.

Many consumers have found that putting money in CDs (certificate of deposit) accounts is a good way to earn extra interest on regular savings accounts. Like the savings account that most of us are familiar, the money you put in a CD will bear interest, and generally, it will receive more interest than a savings account.

A major difference between a regular savings account and a CD is that the money you put in a CD must remain in the bank or credit union for a period of time to gain the full amount of interest. You can make money on a CD, but you must pay a penalty. The basic rule for the CD is not to use the money you think you need to use before the deadline. In other words, you should only buy a CD if you can afford to leave the money alone the amount of time required. All certificates of deposit has a maturity date.

This is the date on which you can withdraw money without paying a penalty. The length of time.