Credit Union CD Rates

Most credit unions offer CDs or Certificates of Deposit for those looking for ways to invest for the future. Credit union CD rates may vary depending on a number of factors. You may find that some CDs, such as three month certificates, have interest rates of around 2 percent while full one year CDs may offer rates as high as 3 percent. In order to take advantage of CDs it is important that you understand how investing in CDs works. One year CDs or those that have longer maturity dates typically earn a much higher yield than shorter CDs.

A CD is quoted with an annual return rate. When you see credit union CD rates what you are actually seeing is the annual return rate of that specific CD or the percent that you will earn on your investment if you hold that particular CD for an entire year. Assuming that you were to purchase a CD with a 2 percent rate, you should understand that the CD will only pay off if you hold it for the appropriate amount of time. CDs will only pay on maturity, so if you purchase a CD at a 2 percent interest rate for $1,000 and hold that CD for an entire year then you will have earned $20. However, if you only hold the CD for three months then your interest will be cut short. You will only earn $5 in interest. Many CDs pay out monthly so you will earn an interest on the CD at the end of each month. In the example above, you will earn approximately $1.66 each month for an entire year. Some CDs also allow you to put your interest on the balance of the CD which means that the interest you are paid monthly will also begin to accrue interest. Compounding monthly will add up much quicker than compounding annually so if you have a choice, this is a much better return on your investment.

You can purchase certificates of deposit at most credit unions and banks. Before you purchase however, you should take the time to learn a bit about CDs and how they work to ensure that you choose the right amount for your financial saving needs. Learn about how often the CD compounds, whether it is monthly, quarterly or annually. Keep in mind that the more often a CD compounds the greater your overall return will be. Check also to see if your interest will roll into the total of the CD which in turn will yield you a much higher return. If you want to save for an entire year then a one year CD is a much better option. Purchasing three month CDs will simply not give you the return that you can expect from a one year CD. The actual amount that you invest will be based on your preferences and what you can afford to purchase. Check with your bank or credit union to learn more about the CDs that they offer, their rates and the various factors mentioned above that will help you to choose the wisest investment strategy.

Different banks and credit unions may offer different CD rates. Be sure that you check around to see where the best rates are offered. You may also want to do a bit of research on the current market rates for certificates of deposit to ensure that you are getting a fair interest rate when you do purchase your CD. Above all, ensure that you are putting your money in a bank or credit union that you trust and one that makes you feel comfortable in investing your money.

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