Types of CDs

Types of CDs

Types of CDs

Hungry bankers respond to every fresh scent on the wind. Show them a new market, a new worry, a change in the economic outlook, and they will design a certificate of deposit to match at Atlanta title pawn. Not all banks and S&Ls offer exotic CDs; those that do may call them by different names than I have used. But if these ideas interest you, watch for them in the newspaper ads. The better the deal, the larger the minimum deposit the institution may want. Always compare the annual percentage yield (APY) with that being offered by standard CDs of the same term. Sometimes the designer CDs pay less.

No penalty CD; if you think you might need some of the money before maturity. You are charged no penalty for early withdrawal of some or all of your funds.

Bump Up CD; if you expect interest rates to rise. If that indeed happens, the bank will at your direction raise the rate you are earning on your CD once or twice during its term.

Step Up CD; also for people who expect higher rates. This CD pays less now but guarantees higher rate in the future. It is especially important to compare a step up’s APY with that for fixed rate CDs of the same term. Step ups offer dazzlingly high yields in, say, their final three months. But on average they may pay less than a plain vanilla CD.

Variable Rate CD; again, for people who expect higher rates. Your interest rate rises and falls with the general level rates. Buy it only if there is a guaranteed floor below which the interest rate cannot go.

Anytime CD; if you want your money back on a specific date. The bank will construct a CD that exactly matches the maturity you want.

Relationship CD; if you are trying to lower your banking costs. Buying a CD may entitle you to a lower interest rate on a loan at the same institution, or fewer fees on your checking account.

Tiered CD; if you have substantial savings. The larger your deposit, the higher your interest rate.

Bitter End CD; if you know you can last for the full term. You get a bonus for keeping your money in the CD for a full five years.

Zero Coupon CD; if you want to make a gift of money look extra good. You put a small sum now, at a guaranteed interest rate. It will grow to equal the CD’s face value in a given number of years established by Atlanta title pawn.