Certificates of deposits are a good place to park your money in between investments. In a short amount of time, certificates of deposit will allow you to keep continuous growth of your money through a set rate of interest within a predetermined amount of time. Maturities of CD’s can range from weeks to years, with the interest rate directly proportional to the amount of time the money is tied up. Many banks and other financial institutions offer this kind of investment, the problem is, which CD do you choose?
Nowadays there is a plethora of certificates of deposit offered by numerous banks and investment firms. Not all of them are alike, so it can be confusing to figure out which one out of all the CD’s will give you the best rates. So how do you find out which one is best without having to break your neck looking over the numbers?
The answer – use a certificate of deposit calculator.
When looking over a certificate of deposit, there are a number of factors to consider. You have to take into account the initial deposit, total of months required, interest rates, number of times the interest will be compounded, plus the fees and penalties in case of an early withdrawal. Using a certificate of deposit calculator, you will be able to find out how much total interest you can earn with a particular CD.
The calculator will show you the amount of annual interest, plus your compounded interest, giving you your annual percentage yield or APY. Getting the annual percentage yield will enable you to compare one CD from the next. The higher the annual percentage yield, the better the CD.
Using the certificate of deposit calculator will help you arrive to a conclusion on which CD gives you the best return for your money. When investing, it’s always smarter to look over all your options before committing to only one. Remember, certificates of deposit may be a great way to grow your money in a short span of time. But you will still need to check which provider offers the best CD rates, and with the least fees and penalties.