High Yield CDs - How to Find the Best Bank Deals, Laddering and More
In today's low rate interest rate environment, many investors fear that High Yield CDs are a thing of the past. CD Yields move in cycles, but so do Bank CD Deals depending on their need for depositor cash.
Certificates of Deposit (CDs) are offered by various financial institutions including banks, thrifts, brokerages, credit unions and insurers. CDs differ from savings accounts in that CDs have a fixed term in order to accrue the promised interest; generally in increments of 3 months at a time, up to 5 years. Once the maturity date has been surpassed, the CD holder is due the principal plus accrued interest. While early withdrawal of CD funds usually results in a penalty to deter investors from doing so, it's generally on the order of 3 or 6 months' accrued interest; you should avoid an offering that would cut into your initial CD principal if you were to break the CD during the lock period.
Most banks that offer CDs that carry FDIC insurance. Steer clear of any institution offering CDs that aren't FDIC insured - they're often "really" high yield CDs for a reason. No American has ever lost money from an FDIC insured deposit. Up through December 31, 2013, the FDIC provides deposit insurance, which guarantees deposits in its member banks up to $250,000 per person per bank. Note that after December 31, 2013, the limit will return to the long term historical limit of $100,000 though regardless of cd rates.
Learn About How a CD Ladder Can Get You a Better Return
See How to Find the Best High Yield CD Rates