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All About CDs (Certificate Of Deposits)

Aug 18, 2007
When the richest people in the world are asked to give advice about how to earn and retain money, their response almost always resounds with the same principles: Your money should always be working for you, instead of you working for it.

The ideal situation is to put your money into something with a high rate of return. Then, while you are enjoying life, your money is constantly returning more. One option is to put your money in a CD (Certificate of Deposit), which is a type of account offered by many banks. They don't work like regular bank accounts. So if you've been contemplating ways to make your money work for you, read on.

CDs are characterized by being registered for at a fixed amount of time. When you put your money in, you tell the bank that you are going to leave it for a certain amount of time. The most common amounts are 3 months, 6 months, or any amount of years up to 5. The specific interest rate is set at the beginning, and does not change over the period of time.

The money in the CD is held until it 'matures', at which point the customer can withdraw it without bringing about any fees (which are applied if he or she withdraws before the date of maturation).

This may sound like a bad deal, but consider this: since the customer has to put up with having their cash unavailable for so long, they have their diligence rewarded with a particularly high interest rate. This is the aspect that attracts people to using CDs. Since they are offered by regular banks, they are completely insured. This makes them an almost entirely risk free investment, as long as you know you won't need the money.

If you've got a large sum of money sitting around and you're not doing anything else with it, then you should make every effort to put it to work. Some people are not cut out for high risk investments like the stock market. If this is the case, then the calm assuredness of CDs could be perfect for you.

Talk to people at your local banks to find their specific terms and conditions for CDs. Look for things like flexible liquidity, high interest rates, and time periods that suit your needs. Hopefully you will find something that is perfect for your finances, and will put your money to good use.
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