If you're putting money into a certificate of deposit (CD), it's natural that you'd like to see your savings grow as quickly as possible. That makes it easy to focus exclusively on the interest rate—more specifically, the annual percentage yield (APY)—that most financial institutions advertise prominently. CD interest rates do matter, but they aren't the whole story.
Consider the CD term length. First of all, you also need to consider the length of time until the CD matures, which is when you can withdraw your principal without penalty.
Know the early withdrawal penalty. Be sure you understand the terms of the account, including the amount you'll pay for accessing your funds in the CD before maturity.
Know your financial institution. Banks, savings-and-loan institutions and credit unions all offer CDs. Be sure you choose a reputable institution with a solid history. Some people may use a broker to help them find the best CD interest rates. The U.S. Securities and Exchange Commission recommends you thoroughly research the background of the deposit broker if you go this route.
Ally Bank offers a full line of CDs to help you reach your savings goals. At Ally Bank, you can open and fund any CD with any amount and earn some of the most competitive rates in the country as published by Bankrate.com. In addition, your deposits are insured by the Federal Deposit Insurance Corporation (FDIC) up to the maximum amount allowed by law. Learn more at Allybank.com or call live, 24/7 customer support at 877-247-ALLY (2559) today.