After depositing enough savings or profits into liquid and emergency funds, consider low-risk bank certificates of deposit to store additional cash that you don't immediately need. Certificates of deposits are fixed-income investments from traditional and online banks, and you can choose either individual or business certificates of deposit. Compared to savings and money market accounts, CD rates of interest earned are higher. Unlike other accounts, certificates of deposit cannot be withdrawn on demand, unless you open a liquid CD. Otherwise, you must commit to the bank's or brokerage's holding a certain amount of money until it matures. Holding periods, or CD maturity dates, differ depending on the bank, but they usually range from seven days to 10 years.

One of the specifications for opening a CD account is type. Traditional and high-interest bank CDs are among the popular types. Traditional certificates of deposit allow you to save a specific amount of money at the current interest rate. High-interest bank CDs offer above-average rates, but sometimes come with high minimum deposit requirements.

1. Compare high-interest bank CD rates.

2. Learn about requirements to open a certificate of deposit.

3. Choose the bank or brokerage where you want to open the account.

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Track the best high-interest bank CD rates

Once you've studied the certificates of deposit (CDs) basics, find neighborhood or online banks that offer competitive CD rates.

I recommend: Search for the most popular certificates of deposit at Bankrate.com. Compare the highest local and national CD rates as well as high-interest business CD rates. Bankaholic.com also posts the most current, high-interest bank CDs, and provides other information about certificates of deposit, such as savings strategies. The U.S. Securities and Exchange Commission also offers tips for investing in certificates of deposit.

Understand the requirements for opening a certificate of deposit account

Some banks require you to put large sums of money into bank CDs, while others allow you to open a CD with a smaller amount. Also, make sure that the individual or business CD rates are guaranteed, that you have online access to your account and that the account is FDIC-insured.

I recommend: Capital One requires a minimum deposit of $5,000 to open a CD, regardless of the term. Jumbo, high-yield CDs require a minimum deposit of $100,000. GMAC Bank requires a minimum deposit of $500 whether you want to open a one-year or a five-year term.

Open a certificate of deposit account once you've decided on the bank or brokerage

Once you've located a bank that meets your savings needs, and you've determined the amount of money you want to put into the CD investment, follow the instructions for applying for the account.

I recommend: Many national banks such as Bank of America feature an express application process online. At Discover Bank, the CD application process can be completed in four steps.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  Other types of CDs include bump-up, callable and liquid. If the interest rate rises on a CD you currently own, then the bump-up option gives you a chance to request the higher rate for the rest of that term. Callable CDs are investments that can be 'called' by a bank before the CD maturity date, then reissued at a lower rate. Liquid certificates of deposit are CDs that offer you the freedom of withdrawing some of the funds without any penalties.
• •  Cashing out on high-interest bank CDs subjects you to paying early withdrawal penalties. In this case, it's possible to lose out on three to six months' worth of interest.

You're not on a shoestring anymore, and extra cash may be idling in your business checking account. Consider parking your cash in a bank certificate of deposit (CD), a time-based, fixed-income investment that can earn you extra income with no effort on your part.

Here are three things you need to know:

1. This is a great way to store your money at a higher interest rate than most money market accounts, but depending on the type of CD you choose, your cash may be locked up for a predetermined period of time.
2. You might pay a penalty for early withdrawal, so make sure you know what your bank will charge before you lock the money away.
3. Be clear when the CD matures. Don't confuse call features with maturity. A "one-year, non-callable" CD means the bank cannot redeem the CD in one year – but it does not mean the CD matures in one year.
4. Look for the new "liquid CDs" that many banks are offering. They park your money for a set period at a higher rate, but generally you can take money out any time you want or re-issue the CD if rates go up.

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Shop for the best rates online

Interest rates are constantly changing, and so is the list of financial institutions offering the best CD deal of the moment.

I recommend: Compare CD rates quickly and easily at Bankrate.com. Use the calculator to compute earnings. Also compare rates at Money-rates.com and see what the big national banks serving small business, such as Bank of America, are offering.

Check out cyberspace investing

Many on-line banks offer higher interest rates than brick-and-mortar banks because their overhead is lower, and they can pass savings to you.

I recommend: Go to Ing Direct to open and fund a CD in less than five minutes online. There's no minimum, and you can start with a six-month CD. Other options: Emigrantdirect.com, Imperial Capital Banking and HSBC.

Customize your CD

These days, banks will often customize a CD to terms that match your small business needs. So if you're afraid to tie up cash for a year, choose a very short-term CD of one month.

I recommend: Check out Chase.com and ask for a one-month CD. 1st Mariner Bank offers a flexible CD that lets you bump up the rate once during the term and withdraw without penalty once.

Create a ladder of CDs

Depending on which way interest rates are headed, a CD ladder allows you to lessen your risk, increase your return and gives you access to some of your cash. Buy several CDs at once with different maturity dates, each representing a rung on a ladder.

I recommend: All of these can create a ladder for you: Countrywide Bank, United Bank, LaSalle Bank and Guaranty Bank.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  Brokered CDs are purchased from financial advisors and brokers who scan the world of CDs and present the best, but your cost will usually come from the annual percentage yield (APY) you earn.
• •  Non-profit credit unions often offer a higher rate than banks. Choose one insured by the National Credit Union Administration (NCUA), a federal agency.
• •  Snag a preferred customer rate by opening your CD where you do other banking – but be sure total assets don't exceed $100,000.

Now that you've opened one or more individual or business certificates of deposit accounts, consider a saving strategy. Developing a saving strategy helps when it comes to making the most of certificates of deposit. Minimum certificates of deposit amounts vary depending on the bank, ranging from $500 or $50,000. However, as with most interest-bearing accounts, the more you put toward a certificate of deposit, the better your chances of earning a high CD rate. The same also applies to business CD rates.

Another strategy to consider for high-interest bank CDs is certificate of deposit laddering. This works when you open bank CDs at different intervals and rates. For example, if you have $10,000 to invest, then you can put $2,000 each into CDs lasting for six months, one year, two years, three years and four years. The maturity dates occur at different times, which gives you the option of rolling over into a new term, or redeeming one of the certificates of deposit, plus interest.

1. Pick an account with the best CD rate for your savings goals.

2. Confirm certificate of deposit features such as maturity dates and interest rate changes.

3. Find out how certificates of deposit rates are paid.

Action Steps
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Open an account with a high CD rate

Making the most of certificates of deposit includes working with banks that offer the highest, most competitive CD rates.

I recommend: Get help with picking a brokerage or bank CD by researching the top 25 certificates of deposit rates at Bankaholic. Capital One also offers high-yield CDs depending on the term. You should commit to depositing a large sum to get the higher rate. Brokerage firm Charles Schwab offers FDIC-insured certificates of deposit at competitive rates.

Make a ladder of bank CDs

CDs with longer maturities typically pay the highest rates, but you can maximize the return from your CDs without tying up all your money for the long term. It's called CD laddering. You divide your money equally three ways, put one pile in a one-year CD, one in a two-year CD and one in a three-year CD. When the one-year CD matures, you roll it over into a three-year and so on, raising the average return on all your money without locking it all away for too long.

I recommend: Bankrate.com explains how to achieve the highest CD rates through a CD ladder and provides a ladder calculator to figure it all out.

Confirm certificate of deposit features

Pay attention to account details such as callable features and maturity dates. Remember that changes to individual and business CD rates happen at any time depending on market conditions. Some firms also offer CDs that are payable to beneficiaries upon the account owner's death.

I recommend: Wachovia offers fixed-rate and liquid certificates of deposit. PNC offers high-yield CDs that come with automatic renewal at maturity. Online bank ING Direct allows you to set up living trust features to certificate of deposit accounts.

Be aware of how high-interest bank CDs are handled

Most banks or brokerages add interest to bank CDs daily, monthly or annually. Knowing when your interest is calculated can help you in making the most of certificates of deposit.

I recommend: Discover Bank pays interest toward bank CDs monthly. Customers also have the option of transferring interest to another bank account every month. Fidelity Investments pays interest earned on certificates of deposit at maturity.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  Problems with certificates of deposit, such as misinformation, should be handled with the bank or brokerage firm. If the problem remains unsolved and you don't get your money back, then file a complaint with the U.S. Securities and Exchange Commission, the Board of Governors of the Federal Reserve System or the National Credit Union Administration, all of which oversee financial institutions that issue bank CDs.

Certificates of deposit, also referred to as CDs, are a virtually risk- free method through which businesses and individuals may be able to store extra money and generate high-interest on the amount over time. While certificates of deposit sound simple enough to understand and easy enough to implement, it is important that individuals and businesses understand exactly what they are getting into when it comes to using a certificate of deposit. This is the case with any investment being made. To assist in learning the specifics of certificates of deposit, learn key terms and concepts related to the field.

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Interest rates

Interest rates refer to the amount of money paid for the borrowing or the securing of money. While interest rates are owed by borrowers for loans, mortgages and credit card bills, when it comes to certificates of deposit, interest rates illustrate the percentage of funds the individual or business will be able to earn as a result of storing an amount of funds with a particular financial establishment.

I recommend: For basics on certificates of deposit, including how some interest rates are determined, visit INGDirect.com.

Money market account

A money market account is a specific form of a deposit account. These accounts are typically categorized as having a relatively high rate of interest with short-to-no notice being needed for withdrawals. Money market accounts offer a style of immediate access deposit. They may be subject to federal savings account regulations, which are likely to include a monthly transaction limit.

I recommend: To learn the details of how money market accounts work, visit HowStuffWorks.com.

Call features

Callable CDs, or those which offer call features, may allow the bank issuer to call the certificate of deposit. On specific and predetermined dates, certificates of deposit with call features may be called upon for the bank to give the individual or organization his or her money back and then cancel the certificate of deposit. However, it is important to note that the call features do not allow the individual or organization who put money into the CD to redeem it.

I recommend: For extended information on call features of certificates of deposits, visit InCapital.com.

Maturity

Also known as the holding period, this is the amount of time the money needs to sit before the depositor is able to get his or her principal amount back. In addition to the principal amount, the maturity of a CD will also potentially offer additional funds in the form of interest.

I recommend: Investopedia.com offers additional information on the maturity date of a certificate of deposit.

Liquid certificates of deposit

Liquid certificates of deposit are fixed-interest savings vehicles. They are guaranteed for a specific and predetermined length of time. During the time the funds are tied up in the liquid CDs, clients are able to make withdrawals, meaning the money does not need to remain untouched in the CD account.

I recommend: Liquid certificates of deposit are illustrated in detail at FirstRepublic.com. This site also expresses what individuals may want to consider when it comes to liquid CDs as well as what liquid CDs have to offer investors.

Strategies

Strategies may be employed in order to make the most of certificates of deposit. These are managerial tactics utilized to increase the benefits of CDs.

I recommend: Various certificate of deposit strategies are explored at BankRate.com.