Comparing certificate of deposit (CD) rates may be more complicated that it looks. Yes, it's easy to find and compare CD rates online and it is soon obvious that longer-term CDs usually offer higher rates than shorter-term CDs. But the CD that is right for you may depend on a variety of other factors as well.

Know your goals.
With long- or short-term CDs you know precisely what you will earn and when you will get it. That makes them valued for targeted savings objectives. A longer-term CD can be right when you are saving for a longer-term goal, like a house down payment or a child’s future education. Similarly, a shorter-term CD may be right for property taxes or a vacation fund. Whatever your goals, when choosing a CD, you have to balance your need for higher interest with your need for access to your funds.

Get the best of both.
With a strategy known as "laddering," you open a number of CDs with staggered maturity dates, so that a portion of the total is regularly accessible. To cover five years, you might divide your savings into five CDs: one maturing in one year, another maturing in two years, and so on up to five years. That way, you can regularly take money from each maturing CD and renew each one at the new interest rate. You get a fair amount of liquidity while a portion of your money is getting the higher, longer-term CD rates.

A "barbell" strategy offers another kind of CD structuring. A barbell is like a ladder, with one exception: you don't buy the intermediate-term CDs, just the long- and short-term ones. Compared to buying just short-term CDs, you increase your average yield over all of your CDs.

Knowing your savings goals and a few simple strategies can help you make the most of your CDs. CD rates are only part of the story; an effective mix of good CD rates and liquidity can optimize the way your money works for you.

Explore your options and learn more at or call live, 24/7 customer care at 877-247-ALLY (2559).

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