Certificates of Deposit

Archive for the ‘CDs 101’ Category

Question: I have a Certificate of Deposit question. Can someone help?

If I invest $900 in a 6-month CD at 0.35%, what will I have at the end of the 6 months? I did an online CD calculator and it said it would only be $902… Is that right???

Answer: Yes that is correct. 0.35% is the APR (Annual Percentage Rate) not the actual rate for the 6 months, you will actually only receive 1/2 of that rate over the 6 month period and really that’s basically nothing.

Think about it this way, using basic math and not accounting for compounding, 1% of $900 is $9, 0.35% is $3.15, 1/2 of that is $1.575 which is what you would receive it you didn’t have compounding going on, so $2 is about right when you compound that rate.

Investment Tips & Financial Planning : How to Find the Best CD Rates Online

Question: What’s the best CD (certificate of deposit), in terms of earning interest, right now?

If you put in $1000 for the minimum? I have Chase, but d/k how good their interest percentage is..I have heard ING (online?) is good but not sure how credible/legit an online financial service is. Any input and not too complicated terms! dollars per month accrued would make the most sense to me. Thanks!!

Answer: ING is perfectly legit. But I really don’t think it’s worth tying up the money in a CD for these paltry rates. If you don’t already have an emergency fund of 3-6 months expenses, park your money in a money market fund in a local bank. Go local so you can get to know your bankers and they will know you. It will serve you well, and be worth the 1 percent many times over.

Finance: Investing & Saving : What Is a Timed Certificate of Deposit?