Resources for Certificates of Deposits (CDs)

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 Unlike other accounts, certificates of deposit cannot be withdrawn on demand, unless you open a liquid CD.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.

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.
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.

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.

• 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.