Investing in certificates of deposit (CDs) is viewed by many as a low risk investment strategy. These savings products traditionally allow the individual access to higher interest rates than regular deposit accounts. But, not all products are equal here and using online comparison sites could be a quick and easy way of finding the best CD rates.
Why Compare CD Rates?
Although a certificate of deposit may offer higher returns there are conditions that may need to be met by the investor. In return for increased interest payments the individual is expected to invest their cash for a fixed period of time. It is possible to take out money before the term closes, but this could result in lost interest and penalty charges.
Given that the individual may be tying up their money for the long haul it does make sense to compare CD rates before choosing a product worth investing in. This could simply help maximize returns on investment.
How to Find the Best Certificate of Deposit Rates
The easiest and quickest way of comparing rates is to look at yield comparison tables. There are plenty of online options to choose from that may help to do this. Some will give national CD rates, some local and some a mix of the two. So, what can these tools do?
Generally, the individual will first be asked to choose from a series of initial questions/options to help build their results page. Typical options here include:
- Whether they are looking for national or local CDs.
- What kind of investment term they want to look at.
- What kind of CD types they may be interested in.
- How much they have to deposit.
This initial information will allow the tool to make its calculations. These are usually presented as a table that lists the bank/brokerage that sells the CD, its rates and any conditions of investment such as minimum deposit rates.
This information can often be sorted which may also be useful. The individual could, for example, sort by the base interest rate or the yearly percentage yield figure or they could look at minimum investment requirements. Some sites will also allow the individual to highlight products of interest so that they can drill down into the results and produce a short-list to compare. Some can also help estimate returns on a CD laddering strategy.
Bear in mind that these comparison sites simply show the face value of CDs and shouldn’t be used as the sole decision making factor. Individuals should always check out terms and investigate further before deciding where to invest their savings. Looking at the pros and cons of investing in certificates of deposits may also be useful.