An 18-month certificate of deposit (CD) is a type of savings account that offers a fixed interest rate for a predetermined term, typically 18 months. CDs are considered a low-risk investment because they are insured by the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Administration (NCUA) up to $250,000. This makes them a good option for investors who are looking for a safe place to park their money while still earning a competitive interest rate.
One of the benefits of CDs is that they offer higher returns than regular savings accounts. For example, First Internet Bank currently offers a 5.04% APY on its 18-month CD, while Alliant Credit Union offers a 4.90% APR. These rates are significantly higher than the average interest rate on savings accounts, which is currently around 0.05%.
Another benefit of CDs is that they are FDIC or NCUA insured, which means that your money is protected up to $250,000 in the event that the bank or credit union fails. This makes CDs a very safe investment option.
However, there are also some drawbacks to CDs. One drawback is that they have a fixed term, which means that you cannot withdraw your money without penalty before the term expires. Another drawback is that CDs typically have a minimum deposit requirement, which can range from $500 to $1,000.
Overall, CDs are a good investment option for those who are looking for a safe place to park their money while still earning a competitive interest rate. However, it is important to weigh the pros and cons of CDs before investing to make sure that they are a good fit for your financial goals.
Here are some additional things to consider when choosing an 18-month CD:
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Interest rate:
The interest rate is the most important factor to consider when choosing a CD. The higher the interest rate, the more money you will earn.*
Term:
The term is the length of time that you will be committed to the CD. CDs typically have terms ranging from 6 months to 5 years.*
Minimum deposit:
The minimum deposit is the amount of money that you need to open a CD. Minimum deposits can range from $500 to $1,000.*
Early withdrawal penalty:
If you withdraw your money from a CD before the term expires, you will typically have to pay an early withdrawal penalty. The early withdrawal penalty is usually a percentage of the interest that you have earned.It is important to compare the features of different CDs before choosing one. You should also make sure that the CD that you choose is a good fit for your financial goals.
