Since they were first introduced by the First National City Bank of New York in 1961, CDs have expanded to more than just one simple form.
Certificates of deposit have a long history of delivering steady, guaranteed returns. Now with rising interest rates and increased competition among banks and credit unions, CDs have become even more lucrative to depositors, with plenty paying APYs of upwards of 5% (see some of the highest CD rates you may get now here). But before you deposit your hard-earned money, experts say there are some things everyone should know first.
Everything from varying rates to term lengths to minimum deposits and fluctuating market conditions can play a role in determining whether investing in a CD is the most optimal use of someone’s money, says WalletHub analyst Jill Gonzalez. “You need to be familiar with the terms and decide on a CD that aligns with your financial needs,” Gonzalez says. For those who want guaranteed returns and can lock up their money for a time, a CD may be an excellent option; for those who need their savings more liquid, a high-yield savings account may be the way to go (see some of the highest savings account rates you may get now here).
Because this decision can be complex, savings pros say these are the 10 most critical factors everyone should consider before opening an account. 1. Types of certificates of deposit Since they were first introduced by the First National City Bank of New York in 1961, CDs have expanded to more than just one simple form. So be …