Retirement & Financial Planning Report

Here are two key questions that you should ask your bank or other certificate of deposit seller:

  • Does my interest rate ever change? When deciding whether or not to invest in a CD with a variable rate, nail down exactly how and when the rate can change. Some have a “multi-step” or “bonus rate” structure. This lets interest rates decrease or increase now and then under a schedule that’s set in the beginning. There are other CDs that pay interest rates tracking the performance of a specified market index (examples: the S&P 500 or the Dow Jones Industrial Average).

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  • While your at it, ask if there are any penalties for early withdrawal. Make sure you know what you’d have to pay if you decide to bail out of the CD before the maturity date.