Highest CD Rates - Find the Best CD (Certificate of Deposit) Rates

Certificate of Deposit (CD) is a time deposit. People earn with it by leaving their money in the bank for pre-agreed periods of time. There are three rules of thumb when dealing with certificated of deposit.

These are:

• 1) the larger the principal, the larger the interest;
• 2) the longer the money stays in the bank, the bigger the interest;
• 3) the smaller the bank, the higher the interest.

Because it is a time deposit, the money may not be withdrawn before it reaches maturity. When it does, the full principal can be withdrawn along with the accrued interest. In the instance that the money is withdrawn prior to its maturity, penalty charges apply and usually result in significant losses in terms of opportunity cost.

Fixed Term CD Account

The most common kind of CD is the fixed rate, fixed term CD. The best CD rates are insured by the FDIC (Federal Deposit Insurance Commission) and may not be withdrawn prior to maturity. If these CDs are sold prior to maturity, they are subjected to market conditions, and they could probably lead to loss. Minimum deposit is $25000, and payment period could be monthly, or semi-annual. Average CD rate is 5%

Fixed Rate Jumbo CD Account

Fixed Rate Jumbo CDs are also similar to the fixed rate, fixed term CDs, except the rates offered are much higher. These kinds of accounts, however, are only offered to corporations and institutions. Average CD rate is 5.38%.

Callable CD Accounts

Step-up Bonus rate callable CDs offer different rates during the different intervals of the term. For a 12-year term for example, the rate starts at 5.50% for the first four years, then 6% for the second four years, and 7% for the last three years. Minimum deposit for this kind of CD is $50000, and interest payment period is semi-annual.