Friday, December 21, 2012

What is the difference between a CD and a regular savings account ...

A savings account is a place to park your money, earn a little interest, yet have it instantly accessible.

If instead you put it in a CD, you earn a little more interest on it, but you must leave it in for the specified term (6 months or 1 year, or whatever you agree to ? rates vary by length of time, and change all the time, so a rate offered by a bank today may not be valid tomorrow.)

I?ve seen newspaper ads that are full of fine print, promising great rates in a big font, but the fine print reveals that they make you ?use? their debit card, bill pay services, etc. to get their ?great? rate. Not worth it, imho. It?s my money, and I?m not going to pay anyone for the privilege of lending it to a bank. There are lots of banks out there. Keep looking.

CDs are a safe investment, if the bank is a member of the FDIC. You might ?lose? value due to inflation, but you will not lose your money like investing in worthless stocks, and so on. If your bank gets bought out by another bank, your money is still safe.

Source: http://retirementplanning.investblogs.com/2012/12/20/what-is-the-difference-between-a-cd-and-a-regular-savings-account/

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