When looking at historical CD rates, it is apparent that some trends have remained constant. Generally, institutions that offer certificate of deposits grant higher rates of interests on their CDs that customers deposit money for the agree-on term than those on the CDs in which customers can withdraw the money on demand. For instance, during 2004 most of the popular banks in the world had offered 0.4% annual rate of interest on saving account deposits which are payable on demand, 0.8% on a 3-month CD and 2% on a 2-year CD.

When studying historical CD rates, the trend indicates that over the last 30 years the rates of interest were ranging in between 2-16% annually. During 1979, the average rate of interest on CDs was 11.44% worldwide. This was the rate before considering tax rate and inflation rate. During the same period, those rates were 66% and 13% respectively, which in turn left the net rate of interest of CD as 9.41%.

In 1981, the CD rate was almost 16% and in which year the tax rate and inflation rate were 66% and 9%. All of these factors have kept the net rate of return on CD as 3.5%. During the year 1986, the gross rate of interest was only 6.6%. However the tax rate and inflation rate were comparatively low which were only 52% and 1.1% respectively. Therefore there would not be more deductions from rate of return on CDs resulting in the net rate as 2.02%.

Whatever the previous rates may be, one can say that billions of dollars have been invested in CDs during the 20th and 21 centuries. When deciding on whether to invest in a CD or to go for other sources of investment, Investors need to take their goals and the rate of return into account.

CD Rates provides detailed information about CD rates, CD rate calculators, CD rate comparisons, and more. CD Rates is affiliated with Online Brokerage Firms.

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The rates of CDs are determined by two main factors, the length of time until the maturity date of the CD and the current interest rate. Generally you will find that there will be an increase in the CD rates as the length of the maturity period increases. This is because once the investor has committed in leaving his money in the form of a CD, the institution has more flexibility with the money and can use it for a variety of productive purposes.

Similarly, banks and other financial institutions consider competitive rates of interest while setting their own CD rates. Other factors that determine CD rate include profitability of the institution, bulk buying of CDs etc. Usually credit unions, which are non-profit organizations, offer slightly higher rates of interest when compared to those offered by commercial banks because credit unions can afford to offer a little more to their customers at the cost of higher margins.

Some institutions are very particular about meeting the minimum requirement. If the customer meets the requirement fairly by buying the CDs in bulk, then he will be in a position to get the best rates of interest on his investment. In case of bulk purchase, the institution can use large amounts of the customer’s funds for investment purposes.

Sometimes other factors also influence bank CD rates. For example, some banks try to win some short-term business by offering higher rates of interest on their CDs than their competitors. Banks are eager to sell CDs to everyone, even people who do not have accounts with the institution.

CD rates increase and decrease over time and between financial institutions. Buyers should seek out CD rates that best meet their investment needs.

CD Rates provides detailed information about CD rates, CD rate calculators, CD rate comparisons, and more. CD Rates is affiliated with Online Brokerage Firms.

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Did you know that IRAs can hold CDs (Certificates of Deposit)? If you are nearing retirement and are tired of fretting over your nest egg, your best and safest return may be with a federally insured bank (FDIC) or credit union (NCUA) CD.

Although many brokers offer CDs for IRAs, the rates available are generally much lower than what you can find direct. You may have to do a little more searching and a little more work up front but you could earn $500 - $1000 more each year.

Direct IRA CDs also have other advantages. First, you are in complete control of the funds. The CD is opened up under your title and social security number. You are not just a numbered account at the bank. Secondly, many banks waive early withdrawal penalties on IRA CDs. As a result, if your “Best” rate, is no longer the best, there is a good chance you can move your funds to another IRA CD with a higher rate.

Finally, as of April 1, 2006, the FDIC (banks) and NCUA (credit unions) raised the insurance limit for IRAs to $250,000 per institution. Now you can put even more of your funds at the bank or credit union with the best rate. How can it get any better? Best Rate, Best Service, Flexibility, & Control.

Please visit our IRA rates Page

Chris Duncan is a NASD Registered Representative. He specializes in helping clients find the best and highest CD rates nationwide. His clients include individuals, financial institutions, corporations, and public agencies. Visit us at http://www.jumbocdinvestments.com

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