Certificates of deposit (CDs) are short- to medium-term financial investments that are usually issued by commercial banks and financial institutions to investors. They can be issued in a variety of denominations and the investor actually lends money to the institution and doesn't withdraw it for a prescribed length of time. In return, the institution pays a pre-determined rate of interest to the investor called a CD rate. If the investor wants a longer term on the CD, then his rate of return on the interest is higher.
Finding the best CD rates can sometimes be challenging, considering maturity terms and the interest rate environment. However, the Internet is a very valuable tool when it comes to searching for all kinds of products and services. CDs with longer maturity dates will have a better return for the investor. For the most part, it could be assumed that the best CD rates have the longest maturities. Some individuals feel that CDs are the safest investment because of the lack of market risk, while others invest in them to supplement their retirement income. Regardless of the reason, an investor pursues CDs in the hopes of achieving the highest rate on their return.
When an investor locks up their money for long periods of time, the bank is more than willing to pay that higher rate of interest because they can hold on to the money for a longer. In order to alleviate risk, the investor will forego all other financial alternatives. When you consider the risks that an investor makes, CDs become very attractive.
In similar fashion, bulk buying will also command a better interest rate because the bank may insist on meeting basic requirements for offering the best interest rate possible. Here's another tip: try not to stay with one bank for more than 12 to 24 months. You may wind up losing out on better interest rates at other banks or credit unions when you keep your investment in one place for too long. Credit unions, since they are non-profit lending institutions, will also be a source for the best CD rates compared to a regular bank.