3 Common Mistakes in CD Investing and How to Avoid Them
Saturday, 2 March 2024, 12:30
Investing in a certificate of deposit (CD) can be a great option for many people. If your bank has FDIC insurance, this investment is covered for up to $250,000, so you aren't putting your money at risk. You can also generally earn a better return on your investment than would be available from a high-yield savings account.
Certificate of Deposit Mistakes to Avoid:
- Choosing the wrong CD term: Be cautious of picking a certificate of deposit term that doesn't align with your financial goals or needs. Assess how long you want to invest your money and select an appropriate term length.
- Not shopping around for rates: Always compare rates from different banks to ensure you're getting the best return on your investment. Higher APYs can significantly impact your overall earnings.
- Allowing the CD to automatically renew without review: Remember to review your CD before it auto-renews to make adjustments based on current rates and your financial objectives.
By avoiding these mistakes, you can make informed investment decisions and potentially increase your earnings over time.
This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.