6 great ways to boost your CD interest rate
If you're looking for a safe place to keep your savings and earn a competitive return, certificates of deposit (CDs) are a great option. They often pay higher interest rates than even high-yield savings accounts, and they offer a guaranteed interest rate over a fixed period.
This interest rate is locked in when you open the account, so even if overall rates go down, your earnings won't decrease. CDs are also protected by federal deposit insurance, so your money is protected up to $250,000 per account, per institution.
That said, CD rates can vary significantly from account to account. To get the biggest return on your investment, there are several things you can do.
See today's top CD rates here.
6 great ways to boost your CD interest rate
Earn the most on your savings with the following strategies.
Shop around
One of the easiest ways to increase your CD rate is to shop around. There are plenty of CDs out there, and banks and credit unions are competing for your business. So, take the time to compare rates to find the best one for the terms and conditions you need.
Just be sure to take other things into consideration aside from just the rate. For instance, minimum balance requirements might limit you to certain accounts, while penalties and fees can eat into your earnings.
Look for special offers
Some banks and credit unions have special CD offers for new or existing customers. These promotions can include higher-than-normal interest rates, waived fees and other incentives. Keep an eye out for these offers, but remember to read the fine print carefully so you understand the terms and conditions.
See current CD offers here to see how much you could be earning.
Choose the right term
Typically, the longer the CD term, the higher the interest. However, this isn't always the case. Right now, for example, a number of short-term CDs offer higher rates than long-term ones. By comparing CDs with multiple term lengths, you can narrow in on the ones that have the best rates.
That said, the best term for you also depends on your investing timeframe. If you'll need the funds sooner than later, a long-term CD isn't the best fit for you, even if it has a higher rate than short-term ones. If you incur an early withdrawal penalty, it can erode any extra earnings you gained.
Consider a jumbo CD
If you have a large amount of money to invest, you may benefit from a jumbo CD. These CDs typically offer higher interest rates than regular CDs, which can help you earn more money in the long run.
Keep in mind, though, that the minimum deposit for a jumbo CD can be $100,000 or more, so it's only an option if you can comfortably meet these requirements.
Compare today's top CDs online now!
Build a CD ladder
The CD ladder strategy involves dividing your savings across several CDs with different terms. For example, instead of investing $5,000 in a single CD, you might split it into five $1,000 CDs with staggered maturity dates.
This approach enables you to benefit from the higher interest rates longer-term CDs might offer while also ensuring access to some of your funds sooner in case you need them. It also allows you to take advantage of any increase in interest rates. As each CD matures, you can cash it out or reinvest the money in a new CD at then-current rates.
Negotiate with your bank
Finally, don't be afraid to negotiate with your current bank or credit union for a better CD interest rate. They may be willing to offer you a higher rate to keep your business, especially if you have a good credit score, a long-standing relationship with them or a large sum of money to deposit. It's worth a try, and the worst they can say is no.
The bottom line
Investing in a CD is a smart and safe way to grow your savings. However, getting the most out of your investment requires some research and strategy. By following the tips above, you can make the most of your investment and earn a higher return on your money.
