Expanding Your CD Savings Horizons

When most people think of certificates of deposit (CDs) , they think of the plain old kind. You put money in for a period of time between three months and five years, and you get a guaranteed interest rate. You use them for CD ladders and any number of other things. I had heard of Brokerage CDs and High Yield CDs , but I had no idea that there were even more options than that. Bargaineering offers an excellent list of lesser-known CDs :

• Bump-up CDs
• Liquid CDs
• Zero Coupon CDs
• Callable CDs

It is important, though, to be careful when you start getting fancy with any financial product. Brokerage CDs, for example, may not be FDIC insured . Interest rates vary, and terms and penalties vary as well. Some CDs offer higher interest rates (callable), while others allow you access to your money at any time, penalty-free (liquid). But for every advantage, there is a disadvantage to balance it. You should read the fine print before committing to one of these CDs .

In the end, as with all personal finance transactions, you need to study what would be in your best interest and choose the right product for you. There are some great ways to maximize your cash, and CDs are more versatile than you might realize . Be sure that you understand how they work so that you are able to make an informed decision. Before investing in anything , you should understand how it works.

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