How Do You Compare Bank CD Interest Rates?
When you put money into a bank certificate of deposit (CD), you want to get the best possible return. There are several factors to take into consideration. For example, if you will need the money in the near future, you will have to settle for a lower interest rate. Once you determine how long you can afford to keep your money tied up in a CD, you will need to compare other features among different CDs with the same annual return, such the annual percentage yield (APY). Determine how long you can leave your money in the CD. Banks charge a penalty for redeeming a CD before it matures, so be sure that you will not need your money sooner. CDs are usually offered for terms of three months, six months, one year and five years. Short-term CDs pay a much lower interest rate than long-term CDs. As of May 8, 2010, the national average yield for a six-month CD was 0.91 percent. The average for a five-year CD was 2.88 percent. Compare the annual percent yields (APYs) of CDs with the maturity term
