Certificates of Deposit

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Question: When opening a certificate of deposit, which rate is more important, the interest rate or APY?

Also, how is interest calculated? Can u provide an example? Thanks

Answer: If it is for less than a year then APY does not apply. Because APY is annual percentage yield. So, if you open a CD for 12 months or 14 months or 2-3 years than I would say APY rate could help you out. Some times, banks do offer higher APY for 4- 5 years certificate of deposits.
Therefore, I would say interest rate is important for less than 12 months CD.
Interest calculation: for e.g. if you open a CD of $1000.00 for 6 months @ 6.00% rate. 1000.00 x 6%= 60
then 60 divide by 12 months = $5.00 per month. So, interest for 6 months = $30.00.
I hope this example will help you out.

Bank CD Central

This section is about Certificates of Deposit explained. There are many types of certificates of deposite and understanding every type of certificate of deposit can be confusing. First there is FDIC insurance to understand the then, before investing in Certificates of Deposit, you need to know how to choose a certificate of deposit with the best CD rates that will give you the maximum return for your investments without taking on unnecessary risk.

When investing in certificates of deposits, understanding how they work as well as what choices of certificates of deposits are out there is key to successful investing. The FDIC insurance that accompanies Certificates of Deposit is one of the main attraction of investing in Certificates of Deposit.

Below are some resources to help you understand how Certificates of Deposit work in our Certificates of Deposit explained section. We are constantly adding on to this Certificates of Deposit explained section so please come back to visit us again.

• Understanding FDIC Insurance
• FDIC Insured CD – Certificates of Deposit
• Callable Step-Up Federally Insured Certificates of Deposits
• Example of Callable Step-Up Federally Insured Certificate of Deposit
• What is Possible in Different Interest Rate Scenario?
• Callable Fixed Coupon Federally Insured Certificates of Deposit
• Example Callable Fixed-Coupon FID Offering
• Common Features of Certificates of Deposit
• How to choose your Certificates of deposit
• Useful Terms of Certificates of Deposit
• How to maintain full FDIC insurance on your certificates of deposit after a bank merger