A high-yield certificate of deposit, or high-yield CD, will provide the certificate holder the highest interest rates. High-yield CDs often require a larger monetary investment than do CDs earning typical rates of interest. CDs are a secure investment featuring a guaranteed return and they provide a way to shield investors from some market volatility.
High-yield CDs are usually FDIC insured to the legal maximum, protecting the investment. Individuals can go online or to a bank to find available high-yield CDs. There are also Web sites that provide tips for comparing high-yield CDs. These give individuals quick and easy ways to find the best CD based on various factors.
A high-yield CD may require a lengthy period of investment, so this is something to take into consideration. The CD holder will not have access to the money without incurring some form of penalty. The investor should make sure there is enough cash on hand for emergencies, aside from the planned investment in the CD. Based on the interest rate at the time of investment, the individual may want to explore other investment options that provide a nice return and penalty-free access to the money.
Some banks offer Jumbo CDs that require a large minimum investment in order to receive the highest interest rate. An example of this is a jumbo CD with an interest rate of 2.25 percent that requires a $100,000 minimum investment. A CD such as this typically carries an investment term of ten months or one year.
Some high-yield, long-term CDs have a call feature, which means the issuing bank may elect to terminate the CD after a year or other fixed period. If the interest rates fall, the bank may call high-yield CDs. If the rates rise, the investor does not have the call option and will be forced to keep the CD that carries an interest rate lower than the going rate.
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