Highest CD Rates Info

Something that we here at Highest CD Rates Info get asked a lot is what, exactly, is a CD and how do they work versus regular savings or investment accounts. So we thought an overview of CDs would be appropriate.

What is a certificate of deposit? That is a question often asked by people who do not have any knowledge of financial terminology. Certificate of deposit is a financial product offered by banks, savings and loan associations and credit unions. These certificates are similar to savings accounts but with major differences.

What is a CD account? In real terms, these certificates offer a fixed interest rate that is promised over certain duration of time.   Generally, once you buy a CD you cannot withdraw your money before the end of the term of the CD without paying a penalty to the bank.  For those who need access to their money after a brief amount of time, CDs are available for seven days, 14 days, 21 days and a month. They are known as short term CDs and offer negligible interest rates and ask for higher deposits. CDs are also available for three months, six months and nine months and generally have moderate interest rates. Standard CD rates start from 1-year investment with an APY of at least 0.50% thought most companies offer higher rates.

Usually, highest CD rates are available on five year certificates and they are generally in the range of 2.50% to 3.50%.  Minimum deposit requirement for these certificates varies as some companies do not ask for any minimum balance while others want as high minimum deposit as $10,000 — these are usually called “jumbo CDs”.

CD account rates for two and three year investments are moderate and hover around 1.50% to 2.30%. Certificates are also available for seven and 10 years but APY generally remains constant at the rates that are offered for five year certificates. There are only a few exceptions where financial institutions are ready to offer higher rates for these certificates.