All CDs (Certificate of Deposits) offer fixed or slightly-variable interest rates for a fixed tenure of time. However, there aren’t any set rules about the interest rates that are offered by a financial institution for its CDs. There are numerous national and international banks that offer CDs, each with slight variations in the rate of interests (ROIs).

ose Wisely - Make Comparisons

In order to make comparisons between the CD rates being offered by various institutions, it is vital to understand the following terms:

• Initial Deposit — amount initially invested in purchasing the CD

• Time Period — time taken by the CD to mature
• Interest Rate — the interest rate offered by the issuing authority

Note: this should be the actual interest rate that would be offered to you at the time of purchasing a CD and not the APY (Annual Percentage Yield)

• CD Rate Trend Index (RTI) — many financial advisors tend to provide weekly analysis and reports on the CD rates being offered on Callable or Bonus rate CDS (linked with market investments). These predictions are usually provided in the form of an RTI Survey.

What Is Annual Percentage Yield (APY)?

This is the eventual interest that would be earned within a year on a CD. APY is also a secondary consideration while comparing the performances of CDs among various financial organizations because many of these advertise their Deposit Rates in the form of APY.

The value of APY is dependent on:

• The frequency at which the ROI is compounded (Compounding Frequency)

• The committed (mentioned in writing) interest rate

What Is Compounding Frequency?

Compounded interest can be simply understood as the bigger interest generated on the CD’s accumulating value, i.e. the interest generated on the sum of your CD’s principal amount and the interest earned.

Every bank has a different frequency at which the compounding is done, i.e. the number of times the CD’s interest income is added to the principal amount. Obviously, the higher this frequency, the faster will your accumulated interest rise and more would be the amount that you gain from the additional profit earned. Therefore, at the time of comparing CD rates, remember to check the compounding frequency that is being offered.

Online Sources - Self-Approximation Of Deposit Rates

There are many websites that can help you calculate the interest rates and the total amount that would be due to you at the end of a certain period of time. Many financial websites lists these calculations in the form of ‘CD Rate Calculators’ and these are usually offered for free. All you need to do is just enter the basic numbers like the amount you want to invest and the Calculator will provide all the permutations and combinations including figures like the APY.

These websites also have an updated list of the highest-yielding and more popular CDs. However, these are basically self-help tools that provide instant but approximate, illustrative figures. These can be used to gauge the most probable deposit rates.

Professional Help

In order to be sure about your decision, you would have to seek personalized help from the institution of your choice. You can also seek the help of qualified financial professionals including chartered analysts, financial planners, brokers or personal finance advisors who provide precise solutions, but they would charge for their services.

CD Rates Offered At Credit Unions

Credit Unions function in a way that is a little different from banks although the basic features are similar. These are non-profit organizations and enjoy more liberties when it comes to investing an investor’s funds and thus they offer slightly higher deposit rates than most commercial banks.