If you are looking for a low risk investment option, a certificate of deposit or CD may be right for you. Minimum deposit amounts can vary greatly and there is a CD investment option for just about everyone.
Minimum Investment Amount for CDs
Depending where you choose to open your CD, the minimum opening balance can be as little as $100 or as high as $250,000, which is the recommended cap for any single CD because it’s also the FDIC insurance limit. You should always be sure to invest in a CD at an FDIC or NCUA insured institution. Not only will your principal will be safe, you will be guaranteed a return and interest earned will be protected as well. Typically, the longer you agree to invest your money, the higher the CD rate will earn.
It is generally up to the issuing financial institution to determine the minimum balance. Often, interest rates are tiered according to investment amount. The more you deposit, the higher the interest rate.
Other Important CD Investment Considerations
- Terms and Conditions. Regardless of whether you’re investing $100 or $100,000 into a CD, it is very important to read the terms and conditions of your account. Some smaller CD accounts like $100 minimum investment CDs require additional contributions during the course of the year via a direct deposit program. Also, many CDs automatically renew at maturity, so you should be aware if you need to request withdrawal of your investment amount before you lose access again.
- Early Withdrawal Penalties. One thing to be aware of, regardless of whether you’re putting in a meager $100 or tens of thousands of dollars, there are penalties associated with early withdrawal of the money invested in CDs.
- Higher CD Interest Rates. If you have some spare cash sitting in your checking or savings account, a CD may be a great investment option for you. Depending on how long you can invest the money, even by opening a minimum investment CD you can generally earn a higher rate of interest than other traditional bank accounts can offer.
Next time you have extra savings to spare, why not move the money into a minimum investment CD? Your money will be safe and can grow into a healthy nest egg.
