CD Facts

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What else should I know about CDs?

CD Facts

Everyone knows you have to compare CD rates in order to get the best deal, but for many consumers that is where all their knowledge of CDs ends. Since an informed consumer is a powerful consumer, here are a few other CD facts you should know:

  1. You can take CD interest generally without penalty. If you take CD interest out when you earn it then it will not compound, but because you aren't touching your principal you can take the interest without a penalty being imposed.
  2. CD interest is taxableãunless it is in an IRA or other qualified account. Even if you do not touch your CD interest you must pay taxes on it unless you allow it to grow in a tax-qualified account (like an IRA).
  3. CDs are FDIC insured. FDIC insurance is only good up to the first $100,000 ($250,000 until 2013) you have at any single bank.
  4. CDs come in many different terms, some as few as 6 months.
  5. CDs can be purchased directly from your local bank or through a broker.



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