CD, Fdic, NC discussed on Money Girl's Quick and Dirty Tips for a Richer Life
The minimum amount required to open a CD is generally five hundred dollars but it could be much higher depending on the institution and the type of CD that you buy and you can put an unlimited amount of money into a CD but to be safe. What I recommend is that you always stay under the FDIC or the NC. You a limit that I spoke about the two hundred fifty thousand dollars and that limit is per account holder per institution. So if you've got more than two hundred fifty thousand dollars you might want to spread it out at different institutions. So let's talk about what the downsides are of getting a CD that you know. The upside. Is I mentioned is a guaranteed return? The downside is that your money is locked up for a specific term that might range from a few months to maybe five years. So you get to choose the term when you're purchasing the CD and when that term ends you get back you're principle plus the accumulated interest? Cd's with longer terms generally yield the highest interest rates. However if you need the money and you need to withdraw money from a CD before it expires and that expiration date is known as the maturity date in that case you typically must pay a penalty and the penalty amount is typically calculated as an amount of interest depending on the terms so for example a one year CD might charge the equivalent of three months worth of interest if you dip into it so it's crucial to be sure that you will not need to withdraw any amount of money before the maturity date when you're buying a CD. So I mentioned that there are different types of CDs. There are some with a fixed term and interest rate..