What are CD rates
CD rates, also known as Certificate of Deposit rates, are primarily used in the USA by banks, thrift institutions and credit unions. They are considered a very safe investment vehicle for investors.
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CD rates explained
CDs are an excellent option of investors who wish to place their wealth into an account for an agreed period of time, in exchange for higher interest rates than savings accounts. CDs are a good choice for people who wish to keep their money in an account that is ‘risk-free’. CDs are risk-free because they are insured by the Federal Deposit Insurance Corporation and by the National Credit Union Administration.
A CD works by being kept on deposit for a specific, fixed period of time. The money cannot be withdrawn on demand, unlike with savings accounts, and is usually kept at a fixed term, which can range from 3 months to five years. CDs that have longer maturities offer higher rates than those with shorter maturities.
CDs are generally held until they reach maturity. At this stage, the money has a window in which it can be withdrawn from the account, together with the accrued interest. Alternatively the money can be reinvested into a new CD. Obtaining a CD is relatively straightforward within the USA,
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