10 Things You Need to Know Before Investing in CDs

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Certificates of deposit allow you lock your money for certain time on that get some amount of intereset.


if you take early withrawal then you have pay penatly.



special CD

there are a few banks that offer no-penalty CDs, which allow you to lock in an APY for a certain number of months but won't penalize you if you take your money out early.

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APY is only one part of the equation


While investing money in Cd you shouldn't also look for APY. you should also look for what is compound interest and easy to manage account.

Minimum deposit requirements


There are many cd provider in market. you can also look for minimum cd rates providers.

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Standard Cd and Non Standard


CDs come in terms like 6 months, 1 year, 2 years, and up to 5 years. These are most common. Some banks offer odd term lengths with high rates, like 13 months.

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Some CDs let you withdraw interest


Typically, you can't withdraw the money you deposit into a CD without penalty until it matures. However, some banks allow customers to withdraw the interest income that is paid into the account.

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CDs are FDIC insured


before investing in Cds make sure they are FDIC approved. Money in a CD at an FDIC-insured bank is protected up to $250,000 per person

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CDs automatically renew


You might be surprised to learn that when your CD term expires, the account will automatically renew for another term (usually of the same length) unless you take action.

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CD interest is taxable


One important thing to know is that the interest paid to you by a CD is considered taxable interest income, even if you don't withdraw it

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You can open CDs in an IRA


By opening a CD within your individual retirement account, or IRA, you won't pay tax on the interest income you receive each year

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