An FDIC Insured Financial Institution Is The Basis To A Profitable Investment

by David Jenyns on June 21, 2011

For many backers, the appeal of a certificate of deposit is that it’s a comparatively low risk investment. CDs have federal deposit insurance, up to $250,000 per depositor, per bank, for member banks. What this suggests is if the establishment that holds your CD closes, the central government will make sure you get your money back, dollar for dollar, including the principal and interest accumulated through the date your bank closes. But to be accepted for CD insurance, the bank you purchase your CD from must be an FDIC member bank. The best way to find out if a banking establishment is FDIC insured is to ask. If the answer’s no, then you need to go elsewhere to invest your money, regardless of how high they claim their interest rates are. For instance, some firms have been seen to publicize 5% rates on CDs, but that interest rate is only valid for the 1st $1,000 they deposit.

This is one of the largest reasons that you need to look for more than just high IRs when you are shopping for a CD. To make a sensible investment, you also need to glance at the investment institution. If it is not an FDIC member establishment, the risks can outweigh any other concerns. So when looking for a high interest CD rate, which you should do to maximize your investment, only consider institutions that are FDIC members. You need to also look for establishments that have obviously released CD conditions, so that you can fully understand the CD before you invest.

CDs are one of the safest investment methods, so long as you are careful about where you invest your cash. By following the data in this article, you should be capable of finding a banking establishment that is not only insured member of the FDIC, but one with which you’ll be comfortable investing your cash. Do not forget to look not just for the best CD rates, but also for banking institutions that are members of the FDIC.

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