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Savings or Certificate of Deposit?
Savings or Certificate of Deposit?
I received a check for $2,000 and want to put it away either in a savings account or CD. I am a bit unsure where to put it. I know that a CD offers better rates than a regular savings account; but a savings account offers the flexibility of withdrawing the money at any given time. I am not very disciplined with money and know that if I have easy access to it I will spend it. That's why I am leaning to a CD (limited access); with rates lowering though, would it be a good idea?
Suggestions/opinions, please!
Answers:
rayce92: you can take your money out of a CD anytime you want as well. you just wont get the interest that you were promised. Given the times I would put my money into a bond that has a three year maturity date. If you get a company that is safe and isn't going to go under you will earn the stated interest rate and by the end of the three years you will be able to do other things with it.
2008-04-23 14:53:27
2008-04-23 14:53:27
doreen k: If you're worried about spending the money, then choose the certificate of deposit with a one year maturity. Or, even better, shop around for banks that are offering special rates for non-traditional terms - such as 13 months, 11 months, etc. They do this so that they can attract new money, without having to renew all their regular certificates at the higher, promotional rate.
You won't do much better going long term right now. But, if you want to try to capitalize on the best possible rate, you might put $1,000 in a one-year or similar term and the other $1,000 for two years or similar term.
In a regular savings account, you'll only earn 0.50% per year, and for the amount of money you have to invest, you're not going to do much better even with a money market account.
2008-04-23 14:57:02
You won't do much better going long term right now. But, if you want to try to capitalize on the best possible rate, you might put $1,000 in a one-year or similar term and the other $1,000 for two years or similar term.
In a regular savings account, you'll only earn 0.50% per year, and for the amount of money you have to invest, you're not going to do much better even with a money market account.
2008-04-23 14:57:02
Meme: Don't put all your eggs in one basket. If you were really in a crunch, how much money do you think you will need? $500? then put that much into a Savings account, (have you looked into on line ones, they have much better rates, check out ingdirect.com or emigrantdirect.com that way you won't have instant access to it) and the rest into your CD. Or put all of it into on line saving account if it gets a better rate than a CD.
2008-04-23 15:00:07
2008-04-23 15:00:07
mysavingskit: You may want to consider an online savings account. I went with ING (www.ingdirect.com) and they not only pay a higher interest rate than traditional savings accounts, but they post your interest on a monthly basis. I have recommended this type of account to many family and friends and they like how simple it is.
2008-04-23 15:01:02
2008-04-23 15:01:02
krstfr: You said it already ! If you dont trust yourself with money..... put it in a cd , youll get a better rate as well ! = )
2008-04-23 15:19:43
2008-04-23 15:19:43
Chosen Answer
bfdavis1972: A money market might also be a good option for you. It would definitely pay better than a savings account, but be more liquid than a CD. The risk you run with a money market is that interest rates may be cut again, lowering the amount you'd be making. If you get into a CD you are locked in (unless you buy it at a brokerage and then try to sell it in the secondary market, which would possibly be at a loss) but you don't have the risk of interest rate fluctuation. What is more important to you-a set rate that won't change, or the ability to access your money?
2008-04-23 15:34:09
bfdavis1972: A money market might also be a good option for you. It would definitely pay better than a savings account, but be more liquid than a CD. The risk you run with a money market is that interest rates may be cut again, lowering the amount you'd be making. If you get into a CD you are locked in (unless you buy it at a brokerage and then try to sell it in the secondary market, which would possibly be at a loss) but you don't have the risk of interest rate fluctuation. What is more important to you-a set rate that won't change, or the ability to access your money?
2008-04-23 15:34:09
Dee: My opinion would be to put 1,000 in a cd with a short term and put the other 500.00 into two savings accounts and make sure one of the savings accounts is not a bank or credit union too close to you to get too. Rates will go back up eventually, but right now I wouldn't put it all into a cd. This way when the cd is ready to mature you have two different banks that you are a customer of and you can plan with those two banks to see who will get you the better rate for the next cd.
2008-04-23 17:53:31
2008-04-23 17:53:31