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Like traditional CDs, callable CDs are time deposits that pay a fixed interest rate over a specified term. What differentiates a callable CD from a regular CD is the call option, which means that the bank that issued your CD has the option to redeem, or "call," your CD before the maturity date.

What is a call option? Lets say, for example, that you have a five year CD with a one year call date. What this means is that, one year after you buy the CD, your bank can decide whether it wants to cancel the agreement and return your money, along with whatever interest it has earned up to that point. Its important to understand that, while the bank has this option to dissolve the contract on the call date, you do not have the same option. You are still bound by the maturity date on the CD in this case, five years.

Why would a bank want to call a CD? The main reason a bank or broker will recall a CD is due to a change in the prevailing interest rate. Basically, when you purchase a CD, whats happening from the banks point of view is that the bank is borrowing the money in your CD from you, and paying you a certain interest rate for the privilege of using your money for a certain period of time. If interest rates decline, the bank may be able to borrow money from another source at a lower rate than it is paying you for the CD. At that point, it makes sense to them to say, heres your money back with interest, thanks very much.

If this happens, you will be stuck trying to find a new investment vehicle for your money. However, since callable CDs tend to promise higher returns than regular CDs, if you are looking for a high yield certificate of deposit, it might be worth it to you to take on the risk of reinvestments in order to take advantage of high returns in the short run.

Callable CDs shift the risk of rising and falling interest rates to you, the consumer. Because youre the one taking on the risk, you will get the best CD rates from the bank, but if you have concerns about reinvestment and dont want to watch interest rates, you might be better off getting a traditional CD without a call feature. Be sure to read the fine print and understand what your bank or broker is selling you the investor. Dont be caught off-guard by call features in your search for the best certificate of deposit rates.

Everyone wants to make as much money as they can, and theyre always looking for ways to capitalize on their earnings so as to make even more. The bottom line is, the more money we have the more things we can do, and do securely.

When it comes to investing money, one way to do it is by buying a certificate of deposit, more commonly known as a CD. CDs are basically promissory notes, issued by banks, that earn interest. They have maturity dates attached to them too, from one month to several years. A CDs maturity date is the date when you, the owner, can claim it without being penalized for an early withdrawal. Smaller CDs are, not surprisingly, called small CDs; while the big boys those over $100,000 are known as jumbo CDs. Most people will be purchasing the smaller ones, of course.

As an example, lets say you purchase a CD for $10,000. It has a maturity date of one year, and has a fixed interest rate of five percent. So, when you go to collect it at the end of your year, your CD will now be worth $10,500. Clearly, CDs are on the safer, surer, and slower end of the investing spectrum. While other investment strategies may offer bigger and flashier returns, they also offer more risk of losing your hard-earned money. CDs are truly a safe bet for making money at a decent pace and whats more, they are insured by the Federal Deposit Insurance Corporation (FDIC). In todays uncertain economic times, thats a pretty big deal.

Before you buy a CD or make any other important financial decision, be sure to sit down with a qualified financial services expert and ask as many questions as you need in order to feel comfortable. After all, when it comes to your money, you need to know whats going on.

When you are shopping for the best CD rates , you may have heard the term brokerage CD. What exactly is a brokerage CD, and how does it differ from a regular bank-issued CD? It's pretty simple: a brokerage CD is a certificate of deposit that you buy from a broker, rather than directly from a...

Brokerage CDs

Considered to be one of the safest investments, a certificate of deposit (also known as a CD) is a type of product offered by banks and credit unions that is very much like a savings account. In a tricky market, investing your money in a certificate of deposit is a sound plan for many reasons.

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