A certificate of deposit (CD) is a popular savings instrument. Here, customers earn interest on a lump sum amount locked in for a fixed period. Unlike a regular savings account, the amount invested must remain untouched throughout the term. Failing to do so may invite penalty fees or result in a loss of interest. CDs offer a higher rate of return for the lost liquidity. Avoid these nine common mistakes when opening a CD.
Withdrawing the money too soon
CDs promise a higher rate of return due to the fixed lock-in period. Withdrawing money from an immature CD can be expensive, as lenders typically levy an early withdrawal penalty. The cost may vary from bank to bank. Many opt for liquid CDs, which do not incur a fee when you withdraw the principal amount early. However, these CDs offer lower interest rates and may not be as lucrative as regular ones.
Signing up for a very long term
CDs come in different lock-in periods, the most common being six months, twelve months, two years, and five years. The Federal Reserve meets several times yearly to review interest rates for different tenures based on the economic situation. Currently, the interest rates on long-term CDs are not as attractive as before. However, some experts believe the Fed might hike the rates soon, so holding back for a while would be wise. Instead of locking in $10,000 into a five-year CD today, you could diversify your investment, creating $1,000 CDs with shorter and staggered term lengths. As the CDs mature in the coming months, you can close them and open new ones for a better rate.
Not checking what different banks are paying
Many open CDs in a bank they already have an account with, which could be a mistake. You must shop around and check the rates of interest offered by other banks. Comparing will help you receive the best returns on your savings. Online banks usually offer higher interest rates on savings accounts and CDs than their brick-and-mortar counterparts.
Failing to diversify CD investments
The term “diversification” is often used when talking about investing. It refers to the practice of having a variety of investments, such as stocks, bonds, and CDs. Diversification helps reduce the loss in case one investment fails to perform. Interestingly, you can also diversify CDs or indulge in what is known as CD laddering. Here, you set up multiple CDs scheduled to mature at different times using a combination of short-term and long-term deposits. Staggering lets you access your funds regularly and provides an opportunity to upgrade to a higher interest rate.
Ignoring other high-return savings options
CDs are low-risk, low-return savings instruments. Investing all your money in them may reduce liquidity and stall earnings over the years. Additionally, money tied up in a CD does not grow at the same rate as the cost of goods and services. So, instead of focusing on a single investment option, consider several types to meet your financial goals. The ones you choose must align with your risk tolerance and liquidity requirements. People looking for higher long-term returns may find an IRA or a 401(k) rewarding. Those looking for better liquidity may find a high-interest savings account appealing.
Opening a CD instead of clearing high-interest debt
Consider your existing debts when planning investments. If the interest rate on your debts is higher than the interest rate of your CD, you may make losses. As a rule of thumb, pay off high-interest debts before making long-term investments with modest rates of return.
Letting the CD roll over
Once the lock-in period ends, do not let the CD roll over into a similar term at the same institution. Sure, it saves time and effort, but it fetches a lower rate of return. In some places, the CD may even turn into a regular savings account with lower rates of interest. Instead, begin to shop around as the CD nears its maturity date. Look into higher-yielding CDs and other investment options for the best possible returns.
Ignoring odd-term CDs
Some of the best CDs happen to have unconventional lock-in tenures. Often advertised as standout offerings for periods like 5-, 17-, or 21 months, these odd-term CDs can be gainful options. They may be offered to attract new customers, celebrate an anniversary at the bank or credit union, or for another reason. Keep your mind open to these unconventional options as they allow you to earn better rates of return.
Opening a fee-based account first
Many banks and credit unions may require you to open a checking account before setting up a CD. Ensure these accounts do not have overhead costs. Since the earnings on CDs are fairly modest, fees from checking accounts can significantly reduce your net profit.
Although CDs are a relatively safe and wise investment option, stay aware of these common mistakes and avoid them diligently. Doing so can help you receive the highest possible rates of return to maximize your savings. Research before investing and consult a financial expert if you need more clarification. Also, read the policy’s terms and conditions carefully to avoid misunderstandings.
Stunning earrings collections at the Diamond Studs saleRead more
As Elizabeth Taylor once said, ‘Big girls need big diamonds.’ That women love diamonds is no secret and no woman would ever say no to a beautiful pair of diamond studded earrings. Especially, when it comes as a gift from someone special. If you are a man who believes it is better to have a single flawed diamond than a sack of perfect pebbles, then there are classic diamond studs for you too. You can choose from black, brown, blue or yellow diamonds to suit your individual taste and masculine look from the grand variety offered by Diamond Studs.
This online American jewelry store sells certified and sparkling diamonds with which you can create the most dazzling pair of diamond stud earrings. You can design the perfect diamond jewelry you desire from the remarkable collections on offer at their diamond studs earrings sale. Choose from a variety of shapes: Round, Princess, Cushion, Asscher, Emerald, Hearts and Arrows, Marquise, Oval, and Pear. Order special handcrafted diamond studs that are custom made in the country, and sign up for newsletters to receive discount coupons and special savings promotions. Believing in making shopping simple and seamless for customers, and reducing their costs and passing on the savings to their customers, Diamond Studs provides the best value for money for every style of diamond studs that they sell. So choose to spend your money wisely at their diamond stud earrings sale where all jewelry purchases are shipped with a Certificate of Authenticity. Whether you choose to set your diamond stud earrings in the 4 prong basket, 3 prong basket, bezel or dangle setting in 14k White, Yellow or Rose, or 18k White or Yellow or in Platinum metal, you can pick the diamond quality and size according to your taste and budget.
Though the brand provides a free 30-day return and free exchange policy on their diamond and gemstone purchases, the company is confident and ensures that customers are happy with their selection of jewelry. It might sound unbelievable but one of the best features of purchasing beautiful diamond studs from this brand is their lifetime upgrade offer that lets customers exchange their jewelry to a product of greater value any time.
So enjoy a safe shopping experience with Diamond Studs that includes insured shipping too, along with many other happy and satisfied customers.
Redefine Your Looks with Brand New Contact LensesRead more
Eyes are the reflection of your thoughts. So why hide your beautiful eyes behind those clumsy glasses? Replace your glasses with brand new contact lenses and redefine your looks.
Why choose contact lenses over spectacles?
Contact lenses are thin lenses placed on the surface of the eyeballs to enhance one’s vision. There are many reasons which may compel you to switch from specs to contact lenses; some of them are stated below.
Reasons that may compel you to switch your focus to contact lenses:
– These are rather more effective than spectacles
– These are comfortable for drivers or sportspersons
– You may wear sunglasses or goggles along with contact lenses
– You need not carry another pair of therapeutic glasses along with you
– Contact lenses don’t collect moisture from the air on their surface; therefore, you need not clean them every now and then
– Contact lenses help treat certain eye problems like keratoconus and aniseikonia more effectively
Classification of contact lenses
Contact lenses are classified into different categories according to their usage, material that they are made up of, durability and replacement. The types of lenses according to usage have been listed below:
Vision corrective contact lenses
The vision-oriented lenses are carved to correct the refractive error. The lenses are designed differently to correct different types of vision disabilities. For example, spherical lenses treat myopia and hypermetropia, toric lenses treat astigmatism, varifocal lenses treat presbyopia etc.
These lenses have multiple focal points and are apt to treat presbyopia. Hence, you need not carry two different pairs of glasses to treat near and far vision disability
These are single-vision contact lenses which are used as a treatment for eye disability. If one of your eyes possesses vision disability and the other one functions well, you may use these lenses. You may also use them in case one of your eyes possesses distance vision disability and the other one possesses near vision disability.
These lenses are carved with different focal lengths according to your eye, to deal effectively with your eyes.
These lenses are designed to treat color blindness. Though not much effective, these lenses help people suffering from color blindness in differentiating between the colors. These lenses are also effective for those suffering from night blindness.
When differentiating on the basis of material, there are basically 3 types of lenses, viz.
These lenses were earlier made out of plexiglass and were harmful as they didn’t allow oxygen passage to the cornea, leading to several other eye diseases. Later the lenses material was modified into rigid gas permeable lenses.
Made up of water containing plastic material, these lenses are easy to wear and remove. They adjust easily in your eyes and even allow oxygen passage.
These are not very common and have recently been manufactured. It comprises of a rigid lens on the surface of a soft lens. This gives you the comfort of the soft lens and benefits of the rigid lens.
Different lenses on the basis of durability and replacement
Highly durable lenses can be used for a longer period while less-durable lenses must not be used for longer time. Some lenses allow continuous wearing and can be worn for even a month. Others allow extended wearing and need to be removed every night before sleeping. These lenses are cleaned using a special type of solution and are kept in a lens case.
The lenses must also be replaced after a certain time, to avoid eye problems or eye infections. The daily disposable lenses are for one-time use and must be disposed of after one use. Weekly disposable lenses must be disposed of every week. In the same way, the monthly disposable and quarterly disposable lenses must be disposed of every month. The non-disposable lenses can be used for a year or 1.5 years but not more than that.
How to choose right contact lenses for yourself?
It is better to consult a good ophthalmologist before choosing any lens for yourself. In case, you are buying a lens just to enhance your style with different colored eye lenses, get the right size and shape of the lens. Focus on the quality of material and other important aspects so as to avoid any kind of damage to your eyes.