Tips On Opening A Certificate of Deposit Account

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The Federal Savings Bank informs readers whether a CD is right for them now.

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The Federal Savings Bank

Interest rates on CDs have traditionally always been fixed, but more banks are starting to offer a wide variety.

A certificate of deposit, or CD, is a type of deposit account offered by many financial institutions, such as The Federal Savings Bank. A CD is insured by the FDIC, so it is a good option for anyone seeking a low-risk investment. This type of account generally comes with a higher interest rate than others, which means there is the potential to accrue a lot of money. However, you will have to find the high yield CDs among the many offered.

According to the website for the U.S. Securities and Exchange Commission, to open a CD you have to invest a specific amount of money for a set period of time (this can be anything from six months to five years or more). When it's time to end your account, you receive all of your original money plus the compounded interest - but don't close it too soon. Many CDs come with early withdrawal fees, which means you can get charged if you take the money out before it matures.

Interest rates on CDs have traditionally always been fixed, but more banks are starting to offer a wide variety. For instance, you may be able to receive a CD with a "call" feature, which means the bank can choose to speed up the maturity of your account at any time. Adjusted-rate CDs are also possible, where rates can rely on either a set schedule or the changing market, according to the FDIC.

A few tips when opening a CD:
Be sure to note the length of the term, or when the account matures.
Check whether there is an early withdrawal fee.
Consider how big the minimum deposit is, if there is one at all.

Want to learn more about high-yield CDs and other savings accounts? Call the Federal Savings Bank at (877) 788-3520 to speak to a representative today.

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