12-Month CD Rates

When looking into CDs as investment products, the first thing to consider is how and where you will get the largest return on your investment. Before running down to your local bank or credit union to make your investment, it would be a wise decision to learn a little bit about how CDs operate and where you should be able to earn the highest rates. Also, you will want to know which CDs provide the least amount of risk. Many consumers find that 12-month CD rates offer the soundest investments for the money.

FDIC/NCUA Insured CDs
One thing to be aware of when placing money on deposit in a bank, credit union or other financial institution is whether or not it is FDIC/NCUA insured. The federal government insures CDs if the bank or financial institution is FDIC insured or if the credit union is NCUA insured. These types of investments are seen as safe because the original amount on deposit is insured up to the current maximum amount as established by law. While credit unions tend to offer better rates on CDs than banks, it is important to factor in the length of time (term) you must hold the CD before it matures.

Why Rates Vary with CD Terms
CD terms most often dictate the rates of return on that particular investment. There are short-term CDs that have a maturity date of one month and there are long-term CDs that have terms up to five or more years. Most often rates are higher with longer term CDs. This is only logical because the financial institution is paying you to leave money on deposit so that they can make use of it while in their possession. For this reason, a one month CD would carry lower rates than a one or five year CD. However, a five year maturity date means that you would be leaving your investment tied up for a lengthy period of time to get those higher rates. Most people find that 12-month CD rates provide the best returns available without keeping their investment tied up for unnecessarily long periods of time.

Finding the Best 12-Month CD Rates
Many times credit unions offer better rates than banks because they are generally nonprofit organizations that are owned by shareholders/members of the credit union. However, in recent years there is another type of bank that rivals brick and mortar establishments and this is the online banking solution. Online banks don’t have the huge overhead that brick and mortar banks have and as a result can pass the savings on to their customers in the respect of higher rates on CDs and lower rates and finance charges on loans. If you are not eligible to join any of the credit unions in your locale and would like better 12-month CD rates than your local banks offer, check out some online banks to see what you can find.

Unless you believe that you will need to withdraw your deposit quite quickly, you will probably find that 12-month rates offer the highest yield for the amount of money on deposit without tying up your investment for long periods of time. Check out local banks and credit unions, but also take the time to do a little shopping around online. Find the best 12-month CD rates and then make sure the financial institution you place your deposit with is either FDIC or NCUA insured to protect your investment. CDs are seen as safe investment products but you could lose a bit if you cash in before the maturity date. Understand your options before making that initial deposit to better safeguard your money.

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