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.

Previous Read

10 things to know before investing in precious metals

Investing in precious metals has long been popular for diversifying portfolios and protecting wealth. Precious metals like gold, silver, platinum, and palladium have maintained their value over time and could serve as a hedge against inflation and economic uncertainties. However, before diving into the world of precious metals investing, it's crucial to understand the nuances of this market and make informed decisions. This article explores essential tips to know before investing in precious metals. 1. Understand the types of precious metals Before investing in any type of precious metal, it is essential for the investor to understand the different types of precious metals available. The most common precious metals are mentioned below: Gold Gold, which is known for its historical value and stability, is often considered a safe asset. It might be bought in various forms, including coins, bars, and jewelry. Silver Silver is less expensive than gold and has various industrial uses, making it more volatile but potentially profitable. It's available in coins, bars, and other forms. Platinum Platinum is rarer and more valuable than gold, but it is also more volatile. It's used primarily in the automotive industry and is available in bullion coins and bars. Palladium Palladium is a precious metal primarily used in the automotive industry for catalytic converters. It's available in coin and bar forms. 2. Determine investment goals Investors should have clear investment goals before entering the precious metals market. They should focus and learn more about factors like protecting their wealth against inflation, diversifying portfolios, or understanding and speculating about short-term price movements. These goals could influence the type of precious metal an individual invests in and their strategy. 3. Conduct thorough research Investing in precious metals requires a solid understanding of the market. Investors should research historical price trends, supply and demand dynamics, and geopolitical factors that could affect the prices of these metals. Staying informed about economic news and global events is essential for making informed decisions. 4. Pick the right investment vehicle There are usually several options for investing in precious metals, including the following: Physical bullion This involves purchasing physical coins or bars of precious metals. While it offers direct ownership, it also requires storage and insurance. Exchange-Traded Funds (ETFs) Precious metals ETFs offer exposure to the metals' price movements without the need for physical ownership. They are traded on stock exchanges and provide liquidity. Mining stocks Investing in mining companies that extract and produce precious metals might be another way to gain exposure to the sector. Factors beyond metal prices, such as operational issues and management decisions, might influence these stocks. Futures and options Experienced investors may trade precious metals through futures and options contracts, but this involves higher risk and complexity. 5. Consider storage and security If an individual decides to invest in physical bullion, they should consider storage and security. Storing precious metals at home could be risky, as they might be vulnerable to theft or damage. Alternatively, one could use a secure vault or storage facility. Ensure that the storage option one chooses is reputable and insured. 6. Be wary of scams and counterfeits The precious metals market is not immune to scams and counterfeits. Investors should be cautious when buying from unfamiliar sources or unverified dealers. One should stick to reputable dealers and verify the authenticity of the precious metals purchased. 7. Diversify the portfolio Diversification is a key principle of investment strategy. Precious metals may play a role in diversifying a portfolio, but they should not be the sole focus. A diversified portfolio may include stocks, bonds, real estate, and other assets to reduce risk. 8. Consider taxes and regulations Diversification is a key principle of investment strategy. Precious metals may play a role in diversifying a portfolio, but they should not be the sole focus. A diversified portfolio should include stocks, bonds, real estate, and other assets to reduce the risk of losing a lot of money. 9. Stay informed and monitor investments The precious metals market could be highly volatile, with prices influenced by various factors. Investors should stay informed about market developments and regularly monitor their investments. One should adjust strategy to align with goals and risk tolerance. 10. Seek professional advice For those new to precious metals investing or those with substantial portfolios, seeking advice from financial advisors or experts might be beneficial. They may provide guidance tailored to the investor's specific circumstances and help the investor make informed decisions.

Next Read

Top 4 apps for credit building to improve credit scores

A credit score is a number between 300 and 850 that records one’s creditworthiness. Those with higher credit scores are more likely to receive loan approval and reduced interest rates. This score is based on one’s credit history, drawn from factors such as the total number of accounts in their name, types of loans, length of credit history, debt utilization, etc. Several credit-building apps have emerged on the market to help people improve their credit scores. How credit-building apps work Credit-building apps tend to offer three distinct services. These are as follows: 1. Credit monitoring With major credit bureaus, there are restrictions on how often one can access their credit score. However, some apps offer credit monitoring services to allow one to check their score daily, weekly, or monthly. They also offer tips and suggestions for how to improve one’s score. Lastly, they also monitor activity on one’s accounts, sending alerts for any new accounts or suspicious activity that may occur. 2. Credit building lenders Some apps also offer credit-building loans. As the name suggests, these are meant to help build one’s credit score. Since one makes regular payments in a short period of time, these loans can significantly improve one’s credit score. 3. Credit reporting Several apps also help boost credit scores by reporting alternative payment data. Since these payments (such as rent or utilities) are not considered in traditional credit reports, they may help improve credit scores.Top credit-building apps to use Here are some top apps to use to boost one’s credit score: 1. Experian Boost Hosted by the credit bureau Experian, this app is ideal for those with a history of rent and utility payments. It works on the premise of credit reporting, including alternative payments that aren’t usually reflected in one’s credit score. To use this, one only needs to sign up, link their payment accounts, and choose their positive payments to be reported. While it may not be able to fix poor credit, it is a great, inexpensive way of boosting one’s score instantly. 2. SeedFi Those who do not have any credit or borrowing history must try using SeedFi to boost their credit scores. This app offers lender services, with interest-free loans beginning at as little as $10. Users can pay this loan back within the payment cycle. SeedFi then reports this positive payment to credit bureaus, helping improve credit scores. Additionally, this service is free to use, helping first-timers build their credit without breaking the bank. SeedFi also offers Borrow and Grow loans, which offer users cash immediately upon approval. This loan includes a sum that goes into a savings account. Once the loan is paid off, users access this account, effectively acting as an emergency fund. However, this service typically has high interest rates (12.96-29.99%), which could prove costly over time. 3. KikOff KikOff is ideal for those looking to make small monthly payments. According to experts, this service can help users improve their credit score by 58 points. Sign-up on KickOff does not require a credit check. With their credit account, users are offered a small line of credit ($750 per month) to make purchases from the KikOff store. Users can pay these back in the form of small monthly payments to help boost their credit score. The account has a $5 monthly fee that is part of the credit line. This helps one build credit, even if they do not borrow anything else. Additionally, the service does not have associated interest charges or late fees, letting one focus on covering the principal amount easily. 4. CreditSesame CreditSesame is a great option for those looking for a credit reporting app. This free service also offers personalized advice to help users improve their financial standing and boost their credit scores. It operates by recording and reporting a portion of one’s payments to the major credit bureaus. This evidence of on-time payments helps improve one’s credit scores. The app also offers cash rewards for services one avails themselves of on their platform. Users can also avail themselves of a free checking account and a new debit card linked to it for improved cash rewards on the app. Credit scores can have a significant effect on one’s life. They are used to determine one’s reliability by prospective employers and to decide interest rates and approvals on loans, credit cards, mortgages, etc. by lenders. Using the credit-building apps mentioned above can help people improve their scores and establish sound financial footing for the future.

Trending Articles

01

Top 5 cat foods that are recommended by vets

Cats are strict carnivores by nature, and their bodies cannot digest a carbohydrate-rich diet. And pet parents must feed them a nutritionally balanced diet matching their weight, age, lifestyle, and current health condition. Look for food with animal protein as the prime ingredient and has fatty acids, essential amino acids, and minerals. If you are unsure of what food to choose, you can consider the following vet-recommended food for your cats: Human-Grade Fresh, Wet Cat Food by Smalls Smalls is an ultra-high protein USDA-certified cat food subscription service that uses humanely harvested and human-grade ingredients. Trained chefs prepare the food avoiding cheaper fillers like carbs and grains that add volume and reduce cost. The food does not contain any preservatives. You can choose from chicken, a combination of chicken and turkey, beef, or fish for fresh food. Freeze-dried raw cat food is available in turkey, duck, and chicken flavors. While fresh meals can go to the freezer, freeze-dried raw food can be in the pantry. One package may last five meals, and you must read the instructions to store the leftover package properly to avoid contamination. The approximate cost of Smalls cat food is $2.50 to $3.50 daily. Pro Plan® Focus Adult Weight Management Cat food by Purina® Purina Pro Plan Focus Adult Weight Management Cat food is available without a prescription and is a less expensive alternative for weight loss diets.
02

Top 5 luxury watches to check out

Owning a luxury watch is not always a symbol of wealth or power. A handcrafted watch is a work of art, craftsmanship, and precision mechanics. It can be a statement or serve as a family heirloom. Owning a luxury watch is every horologist’s dream. When taken good care of, these watches last incredibly long. If you want to invest in one, you can choose from the world’s leading luxury watch brands like: Patek Phillipe Geneva invented the world’s first wristwatch. Patek Phillipe continues to make the most luxurious watches liked by famous, high-profile men and women. Their expertise lies in making watches with various mechanisms that sometimes may take multiple years to complete. Apart from common complications like date and time zones, some outstanding features include minute repeaters, tourbillons, and split-second chronographs. Their watches contain top-class material for the base and inner mechanics, delicately set precious stones, enamel painting, and engraving. Every watch is sleek, classy, and luxurious. Patek Phillipe does not sell directly but through 78 authorized dealers across the country. Some of the timeless luxury watches from Patek Phillipe include: Nautilus Aquanaut Calatrava Complications Grand Complications Golden Ellipse Vacheron Constantin Vacheron Constantin, based in Switzerland, is the oldest watchmaker and has been in the business since 1755.
03

Top 3 types of mattresses to relieve back pain

An extremely soft or firm mattress or one that is worn out can affect sleep quality and make one feel tired the next day. Further, if used for a long period, it can lead to issues with spine alignment and even strain the back muscles. If suffering from back pain, it is important to pick a mattress that helps relieve the ache and provides adequate support to the spine. So here are the best options: Latex Latex is a natural rubber that can be combined with other natural and even synthetic products to create a comfortable and durable mattress. Latex is naturally elastic and buoyant, and in mattresses, it can help support the sleeper’s lower back, weight, shape, and different sleeping positions. It facilitates adequate spine alignment and helps take the pressure off the heavier parts of the body. Latex mattresses bounce back to their original shape pretty quickly, and this factor ensures good support for all sleeping positions, making it ideal for side sleepers, back sleepers, and stomach sleepers. What makes this one of the top mattresses for back pain is that its springy nature enables smoother movement, and sleepers can change their positions without difficulty. The mattress can retain its shape for many years.
04

5 foods that help improve lung health

Our lungs help us receive oxygen and release carbon dioxide through breathing. The body’s natural defense system protects the lungs from infections, germs, and other pathogens. But you can also improve lung health by making specific lifestyle changes like following an active lifestyle and breathing fresh air. Further, the right nutrition plan is crucial. The following foods have essential nutrients that keep the lungs healthy and lower the risk of diseases: High-fiber foods Inflammation is among the leading causes of lung diseases like asthma and chronic obstructive pulmonary disease (COPD), and fiber can help fight inflammation. A molecule in the blood called C-reactive protein (CRP) indicates inflammation in the body. Fiber-rich foods can contain CRP levels and protect the lungs. Fiber can also improve gut health by increasing the production of short-chain fatty acids. Some fiber-rich foods that promote healthy lungs are apples, artichokes, beans, berries, brown rice, quinoa, sweet potatoes, peas, cereal, and whole-grain bread. Vitamin C-rich foods Vitamin C is a vital nutrient that protects our cells from oxidative stress. It also has properties that protect the lungs from free radicals. Research shows that people who lack vitamin C may have decreased lung function, which may lead to infections.

Our Blogs

6 of the most recognized running shoe brands

6 of the most recognized running shoe brands

If you want to invest in a pair of good-quality running shoes, choose one from a brand that specializes in making them for professional and casual runners. Look for a manufacturer that offers good arch and pronation support that matches the shape and size of your feet. Generally, a pair of running shoes cost between $110 and $150, while some iconic and popular shoes may cost higher. To help you choose from the top brands, here are the leading running shoe brands that are popular among runners: Brooks Brooks is originally from Canada and operates in the U.S. The brand has been making shoes since 1914 and started making running shoes after the Olympics in 1972. The collaboration of Jerry Turner from Brooks, David Schwaber of a rubber company, and Marty Liquori, a long-distance runner, created a cushiony midsole material from ethylene vinyl acetate. Using this, they introduced the Brooks Villanova in 1975. Their pioneering innovation then became the norm for other brands making sneakers. Some of its other innovations of Brooks include a removable sock line, silicone fluid, GORE-TEX, diagonal rollbar, use of pods on the outsole, and use of flexible material under the ball of the foot. Some of the most well-known running shoes from Brooks include the MOGO series, Green Silence, PureProject, Transcend, and the DNA series.
Read More
4 timeless jewelry pieces every woman must own

4 timeless jewelry pieces every woman must own

Every woman, irrespective of age, uniquely expresses her fashion style. And accessories play an important role in the manner of expression. If you think that classic metal or gemstone jewelry is expensive or unsuitable for everyday use, it’s time to change your opinion. Some must-own timeless jewelry pieces can never go out of style. They instantly amp up your look no matter the outfit and garner eyeballs wherever you go. Make these exquisite jewelry options yours now.  Stud earrings Stud earrings are dainty yet elegant pieces of jewelry. They fit quite well on the top of your ear, emitting the right amount of sheen. It has a singular point with a post that passes through the pierced ear, connected through a backing or a clutch behind the ear. The stud, the main part of the earning, can be made of bare metal like gold, silver, or platinum and/or hold a gemstone like a diamond, ruby, sapphire, emerald, coral, or pearl. The size of the stud and the type of stone could determine the price of the pair of earrings. While stud earrings made with precious stones can be expensive, you can opt for those affordable options with semiprecious stones like turquoise, rose quartz, or garnets.
Read More
5 leading SUVs and useful buying tips

5 leading SUVs and useful buying tips

Sports utility vehicles, or SUVs, have come a long way from being mere large-family vehicles to one of the most versatile and in-demand passenger cars. They are safe, well-designed, spacious, and fun to drive. The large-SUV market segment’s revenue is estimated to reach $148.60 billion in 2022. With increasing interest and demand, many new or redesigned models have entered the market. Here are a few leading SUVs to look for: Hyundai Tucson Hyundai has redesigned the Tucson completely. The 2022 version has multiple trim levels, including a sporty N Line model and a rugged XRT model. It also has three different powertrain options: hybrid, gasoline, and plug-in hybrid. Further, the 2022 Tucson has upgraded infotainment systems, multiple rear USB ports, Wi-Fi hotspot, top-class safety features, and driver-assistance technologies like cruise control, blind-spot collision avoidance systems, and driver attention warning. The price of the 2022 Tucson starts at around $25,350. Jeep Grand Cherokee Jeep Grand Cherokee is a mid-sized SUV. The 2022 variant, redesigned to offer a smoother ride, can accommodate five passengers in its top-class interiors with comfortable and supportive seats. The car has three powertrains: the existing V-6 and V-9 and a 4xe plug-in for the hybrid variant. Rear-wheel drive is standard in all models with V-6.
Read More
3 important factors to consider before buying new tires

3 important factors to consider before buying new tires

New all-season tires last for about six to seven years with minimal use and about three to five years if you drive about 12,000 to 15,000 miles a year. The National Highway Traffic Safety Administration (NHTSA) estimates that worn-out tires cause 11,000 accidents every year. To ensure your safety and others on the road, you must change your tires as and when required. Before you buy them, keep the following points in mind: Know to read the tire codes Learn about the tire code to know the right tire for your automobile. If you look carefully, you will notice a code with letters and numbers on the sidewall of your tire. Knowing the tire codes is important to buy similar or better tires that fit your wheel. Some of the relevant codes you need to know when you buy a new tire are: Tire type – the first alphabets indicate the tire type P for passenger cars LT for light truck tires ST stands for special trailer tires T for temporary or spare tires Tread width The three-digit number represents the tread width, the distance between sidewall edges in millimeters, followed by a slash and a ratio. Aspect ratio A two-digit number follows the slash and indicates the tire height from bead to tread.
Read More
4 hair styling tools that give a salon-like look

4 hair styling tools that give a salon-like look

If you like to style your hair frequently without having to spend money at salons, you can invest in some basic hair styling tools. These tools can create beach waves or curls or even straighten them out. There are many hair styling tools that are versatile, easy to use, and do little or no damage to your hair. If you want to invest in hair styling tools, here are a few tools to check out: Hair straightener and curler Combining a hair straightener and curler that is suitable for all hair types allows you the freedom to try out trending hairstyles. Look for a professional straightener or curler with a ceramic or copper flat iron. Choose a flat iron that allows you to control the temperature so that you don’t damage your hair. Experts claim that setting the straightener or curler to temperatures as high as 455 degrees can help straighten the most challenging and rigid curls. The copper ceramic tools also ensure that the hair doesn’t break while you are straightening, leaving your hair straight and smooth once you are done. You can also choose regular and smart Bluetooth straighteners to help you choose the best temperature and care settings every time you use the tool.
Read More
8 effective remedies for nasal polyps

8 effective remedies for nasal polyps

Nasal polyps are tiny tear-shaped growths in the nose and sinuses, usually brought on by asthma, infection, allergies, or other kinds of inflammation. These polyps are usually painless and non-cancerous, however, they can be big enough to cause itchiness, breathing difficulties, sneezing, and running nose. Doctors usually prescribe nasal sprays that can relieve the symptoms and get rid of the polyps. However, one can also try a few natural remedies to deal with the condition: Neti pot (or nasal irrigation) Neti pot is a popular and convenient nasal irrigation device. All one has to do is fill this container with saline solution or add 1–2 tsp salt to distilled water or boiled (and then cooled) tap water. Then, one would have to lean over a washbasin or a sink and tilt their head sideways so that the liquid does not flow back into the mouth. One would have to breathe through the mouth, insert the spout into the upper nostril and allow the fluid to drain from the lower nostril. Then the nostrils will have to be cleaned by blowing the nose to remove mucus and dirt. This process should be repeated through the other nostril. The goal is to loosen and clear the mucus and debris like dust or pollen from the nasal cavity.
Read More