what's one disadvantage of a certificate of deposit

A certificate of deposit requires that you keep the money in the account for a specified amount of time before it matures. For example, on a one-year CD, penalties ranged from 30 days of interest to $25 plus 3 percent of principal, per Bankrate.com. The first CD will pay an interest rate of 5% year for three years. As far as I know when someone wants to deposit money in a bank he can choose between a deposit account and a certificate of deposit. One of the benefits of a certificate of deposit is that you get a high interest rate then if you had a savings account. B. CDs are less safe. Certificates of deposit are among the safest investments available. Here is a comprehensive list of pros and cons of investing in a CD. C. CDs earn a lower interest rate. When you weigh the benefits of a certificate of deposit, there are three interest rate options to consider: A fixed-rate CD has a set interest rate that is paid throughout the life of the CD. Suppose you are considering investing $1,000 in one of the following bank CDs (certificate of deposit). First, they are the least risk of all higher yield accounts and they are insured by the FDIC just like any other bank account. Certificate of Deposit Vs. Savings Account If you’re looking for a place to hold money you can’t afford to lose, but want to earn a higher interest rate than a checking account, two options should make your short list: savings accounts and certificates of deposit. D. CDs are less risky. The second CD will pay 10% th Advantages of CD Laddering. If you take out money early, you'll usually owe a penalty, which can vary widely. Depending on your financial situation, one of the risks to CD investing is that you might need your money before the CD reaches maturity. CDs are less safe. C. CDs earn a lower interest rate. With a deposit account a person is assigned an account bound to his name and only that person or someone to whom the person delegates the right can withdraw money. A certificate of deposit is a special type of deposit account that pays regular interest and guarantees the original investment back after maturity. CDs earn a lower interest rate.D. What's one disadvantage of a certificate of deposit (CD) as compared to a passbook savings account? That’s why a certificate of deposit is a great tool for storing a down payment for a home or another far-away financial goal or purchase. Certificates of Deposit are one of the safest investments you can make. Certificates of Deposits (CDs) are instruments that allow the investor to buy a certificate for a specified price, usually between $500 and $10,000, on which he or she will earn an interest rate. At the end of the term, the investor will receive the money back plus the interest earned. The fact that CDs require you to lock your money away is a major disadvantage to opening one. CDs are less risky.C. D. Depositors must keep their money in the account for a fixed period of time. Depositors must keep their money in the account for a fixed period of time.B. A. CDs are less risky. What's one disadvantage of a certificate of deposit (CD) as compared to a passbook savings account? Moreover, using the CD Ladder strategy you can stagger the maturity dates of your accounts and always have access to at least a portion of your money.

A. CDs are less safe. What's one disadvantage of a certificate of deposit (CD) as compared to a passbook savings account?A. And if … The obvious pro here is that a larger deposit plus a high interest rate equals a major return. B. Depositors must keep their money in the account for a fixed period of time. Investing in a certificate of deposit can be safer than other financial options, but it will lock your money for a certain period of time.

A 5-year CD with a 2.00% APY (annual percentage yield) will earn that rate for the entire term, regardless of any interest rate increases or decreases during the time you have the CD. Why you might not want a CD While a CD could be a good savings tool for many scenarios, there are a lot of reasons you may not want to put your money in a CD.

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