Deciding on a CD Term Length

If you’ve made up your mind that you’re going to invest some money this year, you might be considering a CD, or certificate of deposit. CDs are commonly viewed as a safer alternative to potentially higher-yielding investment vehicles such as stocks or mutual funds, because fixed-rate CDs have a set, guaranteed interest rate, and they’re protected by FDIC insurance. Bank5 Connect CD accounts are actually covered by both FDIC and DIF insurance. The DIF coverage at Bank5 Connect ensures that all deposits are 100% insured, even past traditional FDIC coverage limits.cd-term-length

Not surprisingly, the safety of CDs, coupled with the fact that they generally offer higher interest rates than traditional savings accounts, makes them popular choices for saving money. If you’ve chosen a CD as one of your investment tools, it’s just a matter of deciding how long you want to tie up your funds. With CDs, you have several fixed term lengths to choose from. They can range from as little as 3 months to up to 10 years. The term you select will depend on your unique financial circumstances and needs.

When considering CDs, it’s important to note that they’re intended to be held until maturity. When they mature, you have the option to withdraw the money, along with any accrued interest, but if you withdraw any money before the entire term length is up, you’ll usually be hit with an early withdrawal penalty fee. The policies regarding early withdrawals vary, so it’s always wise to check with your financial institution prior to opening an account to see what kinds of penalties you could incur.

To avoid early withdrawal penalties, it’s a good idea to choose a CD term based on how long you think you can go without needing access to the money. If you anticipate needing to tap into the funds within a few months, then a 3- or 6-month CD will probably be the way to go. Keep in mind however, that typically the shorter the term length, the lower the interest rate.

Generally, multiple year terms offer the highest CD rates. If you know you won’t need to tap into the funds for several years, a multi-year term could be a good fit, but it’s a good idea to consider current interest rate trends and predictions first. Think about it. How angry would you be if you locked in a 2.00% rate on a 5-year CD only to find that the rate on that exact CD increased to 2.50% a few weeks later? Once you’ve opened a fixed-rate CD, your rate won’t change, even if the bank starts to offer the same CD at a higher rate. To help avoid this kind of scenario, it’s a good idea to stay on top of interest rate news, so you have some kind of idea of when rates could fluctuateAs a courtesy, you will be leaving Blog.Bank5Connect.com and going to another website. We have approved this site as a reliable partner, but you will no longer be under the security policy of Bank5Connect.com. Come back soon!.

Another consideration with CDs is how often you’ll be looking to stash away more money. Generally, once you open a CD you can’t add money to it until it matures. Therefore, if you think you’ll want to add money every few months, a shorter term length might be best. Another option is to choose an add-on CD. Add-on CDs are special fixed-term CDs that allow you to deposit additional funds throughout the entire term length. These types of CDs can be hard to find, but Bank5 Connect does offer one. Bank5 Connect’s 24-Month Investment CD allows for additional deposits at any time, in any amount. Plus, there is only a $500 minimum deposit required to open an account, and no monthly maintenance fees.

If you have enough money to open several CDs, another way to allow for ongoing deposits is to invest in multiple CDs with various term lengths. This approach is known as CD laddering. With CD laddering, you end up with a collection of CDs that will mature at regular intervals. With a CD regularly reaching maturity, you’ll regularly have an opportunity to make additional deposits, or withdraw your funds.

No matter what CD term length best suits your needs, just remember to read all of the fine print associated with the account before opening one. This will help you to understand exactly what you’re getting into, and help you to avoid costly early withdrawal penalty fees. And, keep in mind that it’s always a good idea to consult with a tax advisor or financial professional before making any major investment decisions!

CD Laddering Helps Provide An Investment Balance

Striking a balance between having investments that provide solid returns while still having financial flexibility can be a challenge. But an approach called CD laddering can help you maintain that balancing act.cd-laddering-helps-provide-investment-balance

First, a little refresher about CDs, or certificates of deposit. A CD is also known as a “time deposit” or a “term deposit” because it’s set for a certain period of time. The depositor can choose which term they want to go into. CDs are a great way to earn a competitive interest rate and not have to think about setting money aside on a weekly or monthly basis like you would with a savings account.

Essentially, you put your money in the bank and you know that after the period of time your CD is locked into expires, you’ll be able to get your money back with interest that is guaranteed and fixed. There are short-term and long-term CDs available at most banks. Short-term CDs can range from 6 months to a year, while longer terms typically range between 18 months and 5 years.

You can access money in your CDs before they are fully matured, but be prepared to pay a penalty for early withdrawal. But this is where CD laddering can help provide financial flexibility.

CD laddering is a great way to be able to have money tucked away and earning a competitive interest rate, but also have access to the funds at regular intervals. There are a lot of different ways to approach CD laddering, depending on the individual’s investment strategy.

CD laddering involves buying a series of CDs at regular intervals so that they’ll mature at regular intervals as well. So over the course of the CDs’ maturity you have access to funds on an ongoing basis.

For instance, three CDs are opened at different maturity levels – one for 6 months, another for 12 months, and a third for 24 months. When the 6-month CD comes due, you can either cash it out or roll the funds over into another CD.

Using this approach, you regularly have a CD maturing, and its funds becoming available. If you decide you want to only use a portion of the funds once the CD matures, you could take out the interest that you’ve earned and roll over the principal into a new CD.

If you have some CDs that are shorter term with a lower interest rate and some that are longer term with a higher interest rate, you benefit because if you average out all the rates, it’s as if you had a longer term CD all along. That’s why financial experts advise having a mix of both.

Some people have found CD laddering useful as a source for emergency funds. For instance, money set aside for emergencies could be invested in a series of 6-month CDs that are opened once every month over the course of 6 months. When a CD matures, it can either be rolled over into another 6-month CD or cashed out, if necessary, for emergency purposes. Basically this creates a perpetual emergency fund, and the money that’s invested earns a higher interest rate than what would typically be earned in a regular savings account.

Generally speaking, however, CD laddering typically involves rolling over short-term CDs to longer terms at higher interest rates. In the end, you have several CDs with long terms, but they mature at regular intervals, giving you access to funds if you need them.

To learn more about the CDs that are available at Bank5 Connect, go to http://www.bank5connect.com/home/cds. And while CD laddering may fit in nicely with your overall investment strategy, remember that it’s always wise to consult with a tax advisor before making any major financial decisions.

Make Money with a CD — Guaranteed

Some things in life are a “sure thing,” and a certificate of deposit is one of them. It guarantees that you’re going to make money on your money, no matter what.make-money-with-a-cd-guaranteed

A certificate of deposit, or CD, is a financial product similar to a savings account. Where a CD differs, however, is that it has a specific, fixed term and a fixed interest rate. It is intended that the CD be held until the end of the term, when it “matures”. At maturity, you can either withdraw your money along with the accrued interest, or you can choose to roll over the funds into another term and continue saving.

There are short-term and long-term CDs available at most banks. Short-term CDs can range from three months to a year, while longer term CDs typically range from 18 months to 5 years. Typically, the longer the term length, the higher the interest rate.

At Bank5 Connect, we offer CDs with terms of 6, 12, 18, 24, and 36 months. And the minimum deposit for our CDs is only $500. Our 24-month CD is a special “Investment CD” that provides more flexibility by allowing you to transfer funds into your CD at any time. This can allow you to save even more!

It’s important to point out that there is usually a penalty fee for withdrawing money from a CD before the term is over. Be sure to read all the fine print regarding withdrawal penalties before deciding which term length is right for you.

So, how much can you earn with a CD? We offer a handy calculator that lets you estimate your annual earnings using different average monthly balances and term lengths. Try it out to get a sense of what Bank5 Connect CD product could be right for you.

CDs are considered one of the safest ways to save money with a bank. Unlike stocks and other types of investments where interest earnings can fluctuate drastically or you could be in danger of losing your principal, a bank CD has a guaranteed, fixed interest rate you can depend on, and the money in your account is insured up to $250,000 by the Federal Deposit Insurance Corporation (FDIC). What’s more, if your CD is with Bank5 Connect, it’s insured past the FDIC limit of $250,000. Because Bank5 Connect is a DIF-member bank, all of our deposit accounts, including CDs, are insured in full. This means that any dollar amount above the FDIC limit is insured by the Depositors Insurance Fund.

To learn more about our CDs, including current rates, go to http://www.bank5connect.com/home/cds. And don’t forget that it’s always a good idea to consult a tax advisor before making any major investment decisions. Happy saving!