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Certificates of Deposits

If you're looking for a safe investment vehicle, certificates of deposit (CD) may be for you. Bank CDs are treating investors to their highest yields in three years. To help you get the best for your money, here are some tips from the Better Business Bureau.

When searching for the best rate, be prepared to do some hunting. Sometimes the best deals can be found at small institutions that don't have large branch networks or don't offer a full-range of banking services. Do check to make certain that the institution carries federal insurance on deposits of as much as $100,000. Don't be afraid to shop in other states to make sure you're getting the most competitive rate. But keep in mind that you must move quickly when dealing with a distant financial institution. Rates can fluctuate daily and mailing a check may mean that a different rate will prevail when your money arrives.

Another way to get CDs is to go through a brokerage firm. There is no commission and, while you won't get the highest rates in the land, average yields on broker CDs generally beat those at most banks and thrifts. The minimum deposit typically required for broker CDs is $1,000. Banks and thrifts that offer the best CD rates have minimums that can be as low as $100.

CDs are perfect for those consumers who don't need their money immediately. The term for CDs is at least 30 days, so you don't want to lock your money up if you need it during that time period. A bank must give you your deposit back when you ask for it. Even if you want to withdraw your money out of a CD before it matures, you generally can do so if you are willing to pay a penalty. Before purchasing a CD, be certain you understand the penalties associated with early withdrawal. Read the fine print. Watch out for "special deals" that banks will advertise periodically in which CDs will be offered at two or three percentage points above the average of other financial institutions. Make sure you fully understand the conditions and unique features of such offers.

If you have a problem with your investment, contact the bank where you purchased your CD. The bank should respond to you and keep a record of your complaint on file. If the bank doesn't respond, you should contact the federal or state agency that regulates the bank and/or the Securities and Exchange Commission, which regulates brokers.

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