Compare Bank CD Rates
A CD, or certificate of deposit, is a financial instrument that typically offers a fixed interest rate and is used by banks in order to accept deposits from customers for a defined period of time. Banks offer CDs in order to secure deposits that they know cannot be withdrawn like a savings or checking account. In exchange for lending their funds to banks, investors earn interest on the CD until it matures.
Bank CD Interest Rate
When you purchase CDs from a bank, you will earn a fixed rate of interest for a specific period of time. Bank CD interest on short term CDs is similar to bank savings account interest rates. However, the interest rate will typically be higher on CDs with longer term maturities.
Drivers of Bank CD Rates
For both national and community bank CD rates, a large determinant is the state of the U.S. economy. In fact, CD rates at banks are even considered an indicator of the economy’s health. Some banks will offer slightly higher CD rates for a period of time in order to attract more deposits from customers. When this happens, the bank collects more money and is then able to invest more money into other assets.
Since bank CD interest rates can differ from bank to bank – even on similar CDs – it is important to shop around prior to purchasing CDs from a bank. Many banks will even advertise their interest rates on CDs in newspapers or online.
Bank CD Maturities
Banks typically offer CDs with varying maturity lengths. These can range anywhere from just a few months up through five years. Certificates of deposit with shorter term maturities will generally offer lower interest rates, and those with longer term maturities offer higher rates in return for you tying up your funds for a longer period of time.
FDIC Insured CDs
Another advantage to owning bank CDs is the fact that your account is insured up to a cap limit of $250,000 per individual, per bank. This means that if you have CDs at more than one bank, you can actually increase your amount of coverage, as the account at each bank will be insured.
Having this FDIC, or Federal Deposit Insurance Corporation, coverage is significant because if your bank were to go under, you would not lose your investment unless it was more than the amount that it was insured for.