Many people today have found the ‘old school’ way of doing investing. That is to be certain that their hard earned money is going to be there for them in the future and that long term goals are met. During these recessionary times, you have to educate yourself to the best possibilities.
If you have a simple savings account, you check many banks, online or off, to see which one is offering the best interest rates.Before you make your decision to change banks, be sure you understand the rules the bank has. Although a higher interest rate may look attractive, you may have to leave the funds there for a certain period of time or keep a high balance. Think it through before you leap.
Commonly speaking, when investing in certificates of deposit, the longer term you are willing to leave your investment and the larger the amount invested, the higher the interest rate you will earn. That’s because the bank wants to make use of your funds to lend to others. That’s how the procedure works. The longer you decide to let them make use of your money the more money they can make. In order to convince you to leave your funds invested longer they will decide to give you more in interest.
Usually, it is a fact that if you want to withdraw your funds early, you will lose a large amount of interest or may incur a penalty. Many seniors like safe investments such as C.D.’s since they are FDIC insured up to a certain amount. Remember that a high rate is only one element. There are other factors you will need to consider before opening an account. Here is a list of some things you need to be on the lookout for:
1. Make sure you always read and understand what it says in the small print. Many individuals put their faith in large institutions not thinking that the bank has it’s own interests at heart. You need to review the platform person (who helps you open your account) all the details such as interest, how to access your cash, fee’s, etc.
2. How much money will you need to open an account, or buy a CD? Some institutions offer more choices than others. Not everyone has an extra $100,000 sitting around to invest, and not everyone wants their funds tied up in a CD for 10 years. These are things you need to know ahead of time, and don’t just take someones word for it, get it in writing.
3. Don’t make the faux pas of just going with whatever bank has the highest interest rate. Remember, the interest rate is important but there are other factors that you will have to take into consideration before you open an account or invest.
One of the services available to you to find interest rates is a service like Bankrate.Com. Be sure to only use interest rate information as your starting point. Once you’ve decided to look into different banks, you need to make a list of all the questions you want to ask at each bank. Do not let them intimidate you into purchasing or opening an account, c.D., or whatever investment you choose at that moment. Remember, you are gathering the facts before deciding. Many people don’t realize that the bank employees earn incentives for the accounts they open.