What Every Consumer Should Know About CD Rates

When it comes to saving money, a CD (certificate of deposit) is one of the safest, low-risk ways to reach both short term and long term savings goals. But many people have questions about CD rates. For example, how are they calculated? Where can you find the best rates? How can you make the most of CDs while still keeping easy access to your money if you need it? Here’s what every consumer should know about CD rates.



How CD Rates are Calculated



Certificate of deposit rates are determined by the Federal Reserve, a government organization that monitors the economy. When times are good and people are spending money, CD rates go up in order to help stave off sudden inflation. If times are tougher, the Federal Reserve cuts interest rates to make it cheaper to borrow. This in turn can affect CD rates. Still, when it comes to reaching your savings goals, whether they’re six months from now or five years – certificates of deposit are a safe, guaranteed way to make the most of your money.



How to Get the Best CD Rates



With CDs, you’re essentially loaning your money to the bank for a set period of time. The bank in turn pays you interest (in the form of CD rates) for the loan, just as you would pay interest in a home loan or car loan. Banks may pay higher rates if you deposit larger amounts of money or leave your money in a certificate of deposit for a longer period of time. Banks understand, however, that this isn’t always feasible for the average consumer. That’s why some banks, such as Aurora Bank (Equal Housing Lender, Member FDIC), still pay competitive CD rates for as little as six months or with deposit amounts as low as $1,000.



Getting to Your Money When You Need It



One of the main concerns regarding CDs is getting to your money in the event of an emergency. If this is an issue that troubles you, you can always open multiple CDs with varying deposit amounts and time lengths (known as the maturity date). This will let you still take advantage of competitive market rates, but lets you "stack" certificates of deposit for different time frames, so there’s always reasonably close access to your money if you need it. Keep in mind that if you withdraw money early, you won’t get the full benefit of the attractive interest rates and you may have to pay a penalty.



Overall, with today’s CD rates, you can reach your savings goals while being confident that your money is insured against loss if invested in a bank that is a member of the FDIC. This lets you enjoy some of the best certificate of deposit rates while growing your money safely.





Jess Hall writes out of Jersey City about different investment opportunities, including how to get competitive CD rates from online banks like Aurora Bank. Always looking to stay updated on the latest news about her financial institution of choice she tends to look up information at http://www.facebook.com/#!/pages/Aurora-Bank-FSB/168482126522389 more often than not.