Why I Purchased Bank Certificates of Deposits – CDs

I recently purchased three CDs – Bank Certificates of Deposits — Why? Because the interest rate on my money market account is so low I think I could earn more by putting the money on a lottery ticket. Not really, but CDs have a higher interest rate and more restrictions. Here’s what I learned about Bank Certificates of Deposits.

Best Money Deposits:

• Best Money Deposits Tip – Certificates of Deposits (CDs) offer higher interest rates because of the restrictions. Most CDs restrict you from withdrawing your principle balance until the end of the CD term. Meaning, if your CD term is 60 months (5 years), you must leave the balance you open the account with in for the entire 60 months. However, you can have your CD’s monthly interest transferred to another account. For example: You open a CD with $15,000 dollars @ an interest rate of 3.00%. Each month you can have $37.50 transferred to another account — like a savings or money market account. Why is that important? It’s important to have some income coming from the CD over 5 years, although the principle amount is untouchable.
• Best Money Deposits Tip – You can set up your certificates of deposits to pay you the monthly interest income. See the example above. Here’s why you may want the monthly interest — let’s say you need $2000 dollars a month (for monthly expenses). You can purchase enough CDs to gross that amount in interest monthly.
• Best Money Deposits Tip – If you purchase several CDs, as I did — all your money won’t be untouchable. Meaning, if you purchase 3 CD’s one at 60 months, another at 18 months, and the last one at 9 months — you can see that I have plan to receive money at different times. Also, if you purchase several CDs when a better rate comes along you will be in a best position to take advantage of it.
• Best Money Deposits Tip – You don’t have to renew your CD. At the maturity date you have the option to cash in the CD. You don’t have to let the CD roll-over. As I have said above, if there is a better interest rate available — cash in the CD and purchase the CD with the better interest or better duration.
• Best Money Deposits Tip – I have learn that the best interest rates come with bank certificates of deposits with longer durations. Meaning, I have three CDs –

1. 1. Bank Certificates of Deposits – 60 months (5 years) @ an interest rate of 3.00%
   2. Bank Certificates of Deposits – 18 months @ an interest rate of 1.75%
   3. Bank Certificates of Deposits – 9 months @ an interest rate of 1.40%

Again, I purchase three with different duration to have money available to me and not locked away for 5 years. Although, if you can afford to have the principle balance untouchable for 5 years — that’s the best deposit.

To find the Best CD rates go to Money Rates/Best CD Rates

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Other Resources

• Wachovia Bank CDs
• CD Ladder Get Paid Every Year
• Emigrant Direct High Interest Accounts
• Personal Finance Questions with Simple Dollar Answers Aug 10 2009