Home : Finance : 5 Common Mistakes To Avoid While Opening A CD

5 common mistakes to avoid while opening a CD

5 common mistakes to avoid while opening a CD

A certificate of Deposit or CD is a type of savings account option that many explore for financial security. CDs are known for their guaranteed and stable returns, making them a great investment for those who want to play it safe. Banks and credit unions offer them for a specified maturity period at interest rates. However, one can make some rookie mistakes when dabbling in such an investment. One can avoid these pitfalls while opening a CD.

Opening fee-based account
Banks often need one to have a checking account before applying for a CD. However, these banks also have a cost associated with opening a checking account. According to statistics from 2022, the national average return rate of CDs ranges from 0.03% to 0.39%. However, CD rates keep changing, and some banks are providing even 5% APY as of October 2023.

A fee-based account can reduce the returns extensively. For instance, if one takes the national average return rate, say Chase Total Checking, which charges a monthly fee of $12, one may end up paying more in fees than one might earn in returns. To avoid this, ask the representative of the bank if there is a minimum deposit requirement that can help you waive the fee. This way, one can save more money and gain returns.

Neglecting to shop around
Most amateur investors who are new to the CD savings method do not compare rates that are available for CDs. According to some reports, the best rates are available with various banks depending on the investment’s tenure. The higher the investing period, the higher the return. Therefore, it is advised to keep looking for different rates across the market. Ask for referrals, read reviews, and compare rates among banks, credit unions, or other credible financial institutions. This way, one can choose the competitive rate and meet the personal financial goals. Some of the options include:

  • Total Direct Bank – Three to six months
  • Credit Human – 1 year to 18 months 
  • Newtek Bank – 2 years
  • Luana Savings Bank – 3 years 
  • Wellby Financial – 4 years 
  • Farmers Insurance Federal Credit Union – 5 years 
  • Apple Federation Credit Union – 10 years

When it comes to opening a new account, here are some of the best rates available as of October 2023 for investors.

  • CIT Bank offers an Annual Percentage Yield( APY) of 5% and a minimum $1,000 deposit. There are no account opening fees; it’s a six-month CD investment, and there is daily compounding interest.
  • BARCLAYS offers 5.50% APY for 12 months with zero minimum deposit. 
  • American Express National Bank asks for a minimum of $1 and 5% APY. There are no fees, and customers can use the 24/7 post-sale service to clear any concerns or queries.
  • Discover requires a minimum deposit of $2,500, with an APY of 4%. Its investment plan has a duration of five years, and there are no monthly fees, which can result in significant savings. Investors can also lock in their CD rate to guarantee their returns.

Opening long-term CDs during rate hike
When interest rates are on the rise, it may not be the best time to invest in a long-term CD. This is because if an investor locks in an interest rate of, say, 0.50% APY, and in a couple of months, the interest rate increases to 0.75%, they miss out on the opportunity to earn that extra 0.25%. Therefore, experts advise that when rates are increasing, it is better to opt for short-term CDs rather than long-term ones.

Opening a CD when in debt
Many people may consider opening a CD account as a quick fix to pay off their debt. However, this approach may not be the best financial choice. If the interest rate on the existing debt is higher than the interest rate the CD can earn, then it might not be a sound decision to open a CD. Before making any financial decisions, it is best to calculate and compare the potential benefits of different options to pay off the debt as quickly as possible.

Overlooking early withdrawal penalties
Always check for terms and conditions before investing in a CD. This saving method has a maturity withdrawal period, and in many cases, there are penalties for early withdrawal if the CD is set to a particular tenure. These penalties may vary from one bank to another, so it is imperative to read the fine print or speak to the sales executive in detail about any uncertainties.

Most Popular

10 foods for improving blood count and circulation

10 foods for improving blood count and circulation

Poor blood circulation in the body can be brought on by a number of illnesses, such as stress, diabetes, and peripheral artery disease. Low blood counts, in which the body is unable to create enough red blood cells (RBCs) every day, can also cause poor circulation. Additionally, symptoms including numbness, intestinal issues, and cramps might result from a low blood count. So here are 10 nutritious foods that support a higher blood count and better circulation. Why is it important to maintain a healthy blood count and circulation? Blood circulation and a healthy blood count are essential for overall well-being. Not only does the blood carry essential nutrients and oxygen throughout the body, but it also eliminates harmful substances and waste products. Maintaining a healthy blood count guarantees enough red blood cells to carry oxygen throughout the body. Low counts may cause fatigue, anemia, and other health complications. Additionally, proper blood circulation ensures that oxygen-rich blood flows easily across vessels to nourish organs and cells. Without it, people could face various health problems, including hypertension, coronary disease, or stroke – so maintaining healthy circulation and counts is essential for overall well-being. Foods for improving blood count and circulation Our food provides essential nutrients to the body, improving  blood count and blood circulation .
7 cold sore food triggers to avoid

7 cold sore food triggers to avoid

A cold sore is a group of painful tiny blisters that are caused by the herpes simplex virus (HSV). These blisters are also known as fever blisters or herpes simplex labialis. In most cases, the symptoms are the worst when one gets cold sores for the first time. However, after the first outbreak, the body begins to produce antibodies to protect itself from the virus, thus raising immunity against the condition. Managing cold sores – Foods to avoid Usually, cold sores appear when one’s immunity has already been compromised, and unfortunately, they are not as quick to leave. However, these blisters require arginine (a type of amino acid) to replicate and thrive. Hence, depriving the virus of arginine may help reduce the duration of such outbreaks. So, here are some of the foods that must be avoided by patients. Oranges Citrus fruits, such as oranges, contain acid that can cause a burning sensation on contact with the blister. Hence, in addition to avoiding oranges, many healthcare professionals suggest steering clear of citrus fruits like grapefruits as well. Instead, one can opt for bananas and cucumbers to gain optimum nutritional benefits. Pumpkin seeds Although pumpkin seeds are considered incredibly healthy, they are unfortunately rich in arginine.
8 foods that improve kidney and liver function

8 foods that improve kidney and liver function

A healthy kidney and liver are essential to the functioning of other organs in the body, such as the heart, spine, and brain. Keeping this in mind, it is important to provide the body with the best nutritional care possible. There are certain foods that are recommended for improving the health and function of the kidney and liver. Read to know more about the foods that you can add to your regular meals. Cabbage Cabbages have high levels of vitamin B6 and folic acid content, which are known to protect the kidneys from infections and damage. Since cabbage is a cruciferous vegetable, they are known for the phytochemicals which help in breaking the free radicals that damage the body and are also known to cause cancer. They are also high in vitamins like K, C, and fiber. Fatty fish Omega 3 fatty acids are found in fatty fish like salmon, tuna, and other cold water fish like herring, mackerel, and sardines. These are all oily fish that are great sources of healthy fats that keep the body functioning well. According to several researchers and the National Kidney Foundation, the omega-3s found in fatty fish are responsible for keeping blood pressure in check by keeping the healthy fat in check.
6 effective lawn care tips to maintain a green yard

6 effective lawn care tips to maintain a green yard

In most cases, the lawn is the first thing people see when they visit someone’s house. One could argue that maintaining a green and clean lawn is the best way to give the house an inviting look. However, it is not easy to maintain the space, and people often don’t have the time to design, trim, and prune the landscape. Luckily, there are several lawn maintenance techniques to help maintain and beautify the area easily. Water it early in the morning Watering the lawn grass early in the morning, presumably at about 5 am, keeps it fresh and green for several hours. One can also program their irrigation systems to automatically water the lawn in the morning. Watering early prevents fungal diseases as it gives the grass more than enough time to dry throughout the day. The main benefit of watering the lawn early in the morning is that the grass can absorb enough water before the heat of the afternoon. Also, while watering, one can use the flooding technique instead of using sparse water, as the former forces the soil to retain more water throughout the day. Seed the bare spots Weeds can grow in the bare spots of a lawn if one does not cover them with grass over a long period of time.
Everything to know about child sponsorships

Everything to know about child sponsorships

According to statistics, one out of five American children lives in poverty, making their future incredibly bleak and difficult. Moreover, these children have little access to educational opportunities, further limiting their growth. Hence, many charity organizations offer child sponsorship programs where people donate a particular sum of money to be invested in meeting the needs and requirements of less privileged children. This can range from covering healthcare expenses to giving them educational opportunities. What are child sponsorship programs? Child sponsorships are unique programs that connect children in need to a sponsor, thus enabling them to have access to more opportunities for growth. Furthermore, these programs enable the sponsor to make monthly contributions; if the sponsor desires, they can even maintain correspondence with the child. The contributions towards the sponsorship programs can be as low as $1 a day. The organization uses the amount to ensure children receive schooling from an early age, are literate, and have their basic needs fulfilled. Moreover, some organizations even offer financial assistance till the sponsored child graduates from high school. This helps the children break the cycle of poverty and have better chances in life. How to donate for child sponsorship? As mentioned above, sponsorship donation amounts can be as low as $1 per day.

Popular Articles

6 foods to avoid for people with hearing difficulties
Health
01

6 foods to avoid for people with hearing difficulties

The auditory sense is a crucial aspect of perceiving the world around us. However, approximately 15% of adults in the country report some hearing problems. With advanced technology, several solutions, including hearing aids and assistive devices, have been devised to help individuals with hearing impairment. In addition, following a healthy, curated meal plan can help them control symptoms of hearing impairment. Here are some foods to avoid and general tips for those experiencing hearing difficulties. Foods to avoid for people with hearing difficulties Monosodium glutamate An integral part of several packaged and ready-to-eat foods, monosodium glutamate (MSG) is an excitatory neurotransmitter that can cause severe neurological impairment, worsening the symptoms of hearing conditions like tinnitus. Thus, checking the ingredients in ready-to-eat foods and avoiding those with MSG is advisable. Caffeinated beverages It has been found that excessive intake of caffeinated beverages like coffee and tea can elevate one’s blood pressure and aggravate the symptoms of hearing conditions. However, since caffeine also comprises several antioxidants, it may benefit the body in limited quantities. The key here is to limit one’s intake of tea and coffee. Processed foods Processed foods are high in saturated and trans fats, which can lead to plaque generation in the arteries and problems with blood circulation.
Read More
7 easy teeth whitening remedies to try
Beauty
02

7 easy teeth whitening remedies to try

A smile is one of the first things most people notice when they see someone for the first time. Once people put on a smile, they feel completely dressed; this is why people try to keep their teeth from staining and look for whitening techniques. However, not everyone has the time to frequently visit the dentist and get their teeth whitened. So, one can use these remedies to make their teeth look whiter: Brush with baking soda While this is an important ingredient in cakes and cookies, baking soda is also a vital ingredient in toothpaste because of its natural teeth whitening properties. This basic chemical’s mild abrasive effects help scrub teeth stains and whiten the enamel. This teeth whitening remedy is backed by simple chemistry—baking soda creates an alkaline environment in the mouth, preventing the growth of bacteria and removing stains left by acidic food. This easy teeth whitening remedy can be adopted by mixing a teaspoon of baking soda with two teaspoons of water and using this paste to brush one’s teeth. This should be used three times a week and not every day because it may have a corrosive effect on the enamel.   Use coconut oil Coconut oil is one of the easiest teeth whitening remedies.
Read More
6 Safest SUVs to Consider Buying in 2023
Auto
03

6 Safest SUVs to Consider Buying in 2023

Are you looking for a safe, reliable SUV for your family? Look no further. Some of the best SUVs for 2023 come with advanced technology, superior driver assistance features, and safety equipment. They can protect the driver and occupants in a collision and lower the impact of the crash. From luxury to budget-friendly options, there is something for everyone. So here are the safest SUVs you can find this year: Dodge Hornet The 2023 Dodge Hornet is a compact crossover SUV that prioritizes safety and reliability. The Hornet has advanced safety features such as forward collision warning, blind spot monitoring, rear cross-traffic alert, lane keep assist, and adaptive cruise control. The interior of the Hornet has premium materials and plenty of space for passengers and cargo. You also get an 8-inch touchscreen infotainment system compatible with Apple CarPlay and Android Auto. The Hornet is powered by a turbocharged 2.0-liter 268-hp engine and a six-speed automatic transmission. The SUV strikes a balance between power and efficiency and delivers good performance. You can look up “Local Dodge dealers near me” and find dealerships that sell the Hornet. You will be able to find great deals on new and used models at a local dealership.
Read More