A CD rate comparison tool (like ours above) makes it easy to compare CDs by minimum deposit. Depending on your budget, you may only have a small amount to put in a CD. In effect, the minimum deposit is the price of the CD. Tempted to start saving in a CD? Here are the features you should understand before you buy.Ī CD isn't an account, it's a financial instrument you purchase, similar to a bond. (Of course, these days CD rates are quite low, so you may still need to top up your emergency fund over the years to account for inflation.) Interest from a CD can help you offset the effects of inflation, which erodes the value of your emergency fund over time. It needs to be someplace the money won't lose value in a stock market fluctuation but will earn at least a little more interest than it would in your home safe. The questions is where to put that emergency fund, which should be equal to at least 3-6 months of living expenses. In addition to saving for the long-term goal of retirement, it's important to have an emergency fund that you can fall back on in the event of a job loss, medical bill, car repair or other big expense that falls outside of your normal budget. The goal is to end up with a hefty sum that will provide you with income in your post-work years. When it comes to saving for retirement, most financial experts advise saving a lot of money over the course of your career and investing that money in a mix of stocks and bonds. We all know it's important to put away money for the future. This interest rate is generally modest but it beats what you would get from putting your money in a normal savings account - or under your mattress. You deposit some money in a CD from a bank and the bank pays you an interest rate over the term of the CD, which could be a few months or several years. If you want to learn more about which CD might be best for you, check out our analysis of theĪ certificate of deposit, or CD, is offered by a bank, brokerage or credit union.

To find more info about individual CDs, take a look at our What features you should look for when choosing one. It is important to understanding how CDs work and It's still worthĬomparing CD rates, though, because some are higher than others. These days, interest rates are low, which means you won't get astronomical returns from a CD. Putting money in a CD from a bank or credit union can be a safe way to stash your savings and earn a little interest.

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