A certificate of deposit (CD) is a safe and beneficial form of an investment
. It is similar to a savings account but superior in that the rate of interest earned is higher. A CD is basically a deposit you make that is locked in for a predetermined period of time.
First time investors are often encouraged to start out small and give CDs a try. The risk is much less than it is with stocks and the volatility is less as well. The safety of an investment- any investment- should always be called into question before the investment is made. It is your money after all and your number one concern should be how safe and secure it will be once it comes under the control of the financial institution of your choosing.
To put your mind at ease, CD accounts are safe. In fact everyone who tells you that certificates of deposit are safe is correct. To begin with, CDs always qualify for FDIC insurance from the governing body. In a single bank you are insured up to a maximum of $250,000 in the event that the bank should fail.
Not only will you be notified of the date but the options left up to you will also be explained. If you choose to do nothing then what will happen is your CD will roll over into a new one and it will be for the same length of time as the original one was for.
If you wish to do a CD cash because you need the money for your own purposes then on the date the CD matures go to the bank. Make sure you take with you the certificate you were given when you made the investment and a piece of photo identification. It is very important that you do this at this time and do not wait a few days. If you wait until the date of maturation has passed then to cash out your CD will involve you having to pay a significant monetary penalty.
If you are someone who is regularly taking money out of your savings account then you need to realize that it does not work the same with a certificate of deposit. The maturation time of a certificate of deposit can range anywhere from a few months to a year to 10 or 20 years.
Depositing funds into a money market account is as simple as depositing it into a checking or savings account. The money is then available for other investments right away. There are instances however where banks will place a limit on how many checks can be written against the money market account over the course of a month. When it comes to CD and money market rates always do your homework ahead of time!