How to Find the Best CD Rates to Save More Money
CDs (certificates of deposit) will offer a fixed interest rate, which is typically higher than the interest rate you will get for the average savings account. CDs also have a fixed maturity date, which means that you can’t withdraw the funds until that date. If you do withdraw funds early, you risk paying a penalty. CD rates are just one of the many money handling skills that you should be building up over your lifetime.
Your Guide to the Best CD Rates
Finding the best CD rates is just one of the many things you can do to save money and get some money handling skills. The best CD rates can usually be found at credit unions and online banks. If you don’t need immediate access to your money then a high yield CD can be a good way to build savings.
With rates on the rise for a six month or just a year-long CD, this could be a better option than some longer term CDs. With this, you will be able to access your money in months and then even reinvest it into higher rates.
CD Rates and Time
A CD with a longer maturity will pay a higher rate than one with a shorter maturity. This is due to the fact that you are promising to leave the money in the bank for more time and you get rewarded for this. It’s not just directly time that will dictate the rates but also the economy. Rates can rise and fall at any time. You need to decide whether it’s best to lock up your money for a longer term at a higher rate or wait and see if the rate becomes more favorable in the future. To improve your chances and also give you some flexibility, you can strategically choose when your CDs mature.
CD Ladder
A CD ladder is a series of CDs that are going to mature over a predictable time frame. Learning CD rates can help with money handling skills. For example, if you have $10,000 to invest in CDs, instead of just putting all your money in one CD, you can use a ladder approach. In this example, you put $2,500 into a one year CD, a two-year CD, a three-year CD, and a four-year CD.
You would then cycle your maturity funds back to the end of the ladder each year, beginning with the original one-year CD maturity. You can also make this more complicated by adding six-month intervals or longer term CDs but managing the ladders will become harder and you have to have time to build each ladder. It can all fall apart if you don’t stay on top of things.
The Length of Your CD Ladder
In order to determine how long your ladder should be, you will need to decide what you are trying to accomplish. CDs with longer maturities will pay higher rates so the longer the ladder, the more you will earn. However, you may actually earn less if your rates rise after you have set up a long-term ladder when rates were low. Most people will stop at three to five years.
The easiest approach is with one-year maturities because the ladder can become a high maintenance project if you have too many variables. You can get creative with your ladders in order to accomplish the goals you have. For example, you may want to try to match the maturities to your predictable expenses, such as upcoming tuition payments.
With a ladder, you may not have to wait that long for cash flow. One of your CDs should mature soon and provide liquid cash without any penalty as long as you don’t need all your money at once. A ladder can also optimize your cash flow in retirement if you are able to pinpoint how much money you will need each year to meet expenses. You can cash out each CD as it matures yearly to supplement income instead of reinvesting and building on the funds at the end of the ladder.
What Happens When Your CD Matures?
When your CD matures, you will have a few options so it’s best to be proactive to improve your money handling skills.
Maturity Notice
Your credit union or bank will be required to send you a notification before your CD matures. This notification can come by email or regular mail, depending on how you have things set up. You should pay attention this notice and note a few things, including the maturity date of your CD, the default action if you don’t do anything, the rate on renewing the CD, the maturity date for renewing the CD, and a deadline to request a different action.
If you don’t take any action, the bank will usually put your money into another CD that is the same length as that one that just matured. However, you may not get the same rate that you were given before and banks will give you the current rate for a new CD. Sometimes banks even use a lower rate in order to take advantage of those who are lazy so this may not be the best option.
You Have Various Options
The most important thing to remember is that you do have options. You can choose a different CD, move your money to a different bank and choose their CD offers instead of moving the money to your savings or checking account, and using the money for something else. One of the best things to do is evaluate your current financial situation and your goals and then decide.
Shopping for the Best CD Rates
There are a few steps you can take into order to find the best CD rates.
Check Your Local Credit Unions and Banks
You may find that an institution needs to get deposits on the books quickly and they offer some of the best rates in order to do this. You can see these rates advertised.
Shop Online
Another good option is to shop online. Online-only banks can have some of the best CD rates. These online-only banks have lower overhead than a brick and mortar bank so the savings are passed onto you.
Brokerage Firm
Another place to shop around for rates is a brokerage firm. You may not know it but a financial advisor can have some of the best CD rates. Advisors will have access to what is called brokered CDs. They are sold in larger blocks. Be sure that you are working with somebody you trust and do understand the risks of these CDs. Getting out of a brokered CD before maturity can be very expensive. If you have more money than the FDIC wants to insure then you need to be extra careful but brokered CDs can help you stay safe.
Finance Blogs and Articles
Be sure to also check out some money management articles and personal finance blogs online. There are people who do a great job of searching for the best CD rates and help spread the word.
Many financial institutions will give the best CD rates to their best customers. In order to qualify for these rates, you may need to meet the minimum investment requirement. If you are able to afford this, you should take advantage. Sometimes you may be able to consolidate your business with fewer providers for a better rate.
What Is Money Management?
CDs are just an important tool of money management and money handling skills. The money management definition can be simple. It’s the process of investing, budgeting, evaluating taxes, banking, and expenses tracking. It’s a technique in order to make money yield the highest interest output. Spending money to satisfy cravings can be natural. The idea of these money management techniques is to reduce the amount that individuals spend on items that have no significant value to long term portfolios, living standards, and assets.
Money Management Tips
Money management can be tricky since not a lot of people like to talk about money. Reading money management articles can help you get started. Money handling skills can vary depending on the individual. Money management is also going to be different for everyone. It may be that you want to save up for retirement or you are worried that you don’t have any emergency savings built up.
Whatever your financial concerns are, there is no better time than the present to learn money handling skills and get started on good financial habits.
Know Your Money Priorities
Before you begin a budget and hone in on your money handling skills, you need to determine your priorities. You will need to balance your money goals with your money habits. What is the most important thing right now? Do you have credit card debt that you need to pay down? This could be your number one priority. It can also be a wedding or vacation you want to save for or building up your emergency fund. Whatever is concerning you the most, make that the priority in the beginning.
Determine Monthly Pay
It’s going to be hard to manage your money if you don’t know exactly what you earn each month. Determine your monthly income after taxes in order to get some concrete numbers. Once you have these numbers, be sure to add in extra side gig income. Whatever extra income you earn, add it to the monthly take-home pay.
Track Where You Spend Money
This is where you need to play detective with your own finances. In order to get a full picture, you need to have an idea of exactly where you are spending money every month. You can limit yourself to one month’s expenses if you are overwhelmed with figuring this out. Pull out credit card statements, utility and housing bills, bank statements, and any electronic payment records. Open up a spreadsheet to track data or do it the old fashioned way with a pen and paper.
You can also use different financial management tools in order to help you determine this. You may want to categorize your spending. For example, label purchases as wants, savings, debt, or needs. You can even get into more detailed categories such as food, entertainment, and travel costs. After you get all your expenses into one spot, total the categories to see where the bulk of the money goes. You may find that more money than you expected is going to eating out or you are spending a high percentage of your income on housing costs.
Have a Plan
Now it’s time to formulate a plan. The best financial plan will align with your priorities and your spending habits. For example, if you are a fitness buff and you totaled your expenses and found that you spend money on yoga classes, a gym membership, and new athletic gear and you don’t want to cut this out, you will do what you need to continue to fund it.
This means you can cut expenses elsewhere. This could mean brown-bagging your lunch instead of ordering lunch with your coworkers. If you want to set up an emergency savings fund then set up an automatic deposit for your paychecks so the money can get into the account before you think of it as spending money.
Stick to the Plan
Once you have a plan, you need to try it for at least a month. You need to see if it is going to work for you. Find a budget you want to work on and get started with it. You may also want to surround yourself with visual representations of goals to make it easier. If you are saving for your next trip, for example, then put up pictures of the dream trip in order to keep the goals fresh in your mind.
Expect Emergencies
Regardless of your priorities, you will need to have some easily accessible funds. If your goal is to pay down loans instead of an emergency fund, that’s fine but you still need expenses saved up. You are never sure what can happen. Your spouse may lose a job, you could have a medical emergency, or any number of other circumstances can occur. Life happens whether you like it or not. Having the money to deal with problems that come up will make you feel more prepared and secure. Many emergencies will add enough stress as it is so you can take away that element of worry with a solid financial cushion. How you put away money for emergencies will be up to you. You may want to funnel your side gig money into this account or just make small monthly auto deposits.
Save Early and Often
This rule is going to be true regardless of your priorities. The sooner you are saving, the sooner you can build interest. You don’t even need an investment account to earn interest and can utilize CD rates. Many of the best savings accounts also generate interest and are FDIC insured. This means you don’t have to risk losing your money. This rule of saving early and often also applies to your retirement. The sooner you start putting money in a 401k, the better. Even if you are years away from retiring, you need to consider the future. Your money will grow the most if you start as soon as you can.
Utilize Free Money
You don’t want to overlook the assets that are available to you. If you have an employer that matches 401k offerings then you should take advantage of this. Another place to look for free money is your health insurance plan. Are you paying for contacts or glasses out of pocket when those costs could be covered through your plan? Your job may offer discounted gym memberships. Take advantage of everything you can and you may save some cash.
Relook at Your Debt
Take a look at your total debt. Is there something you can refinance for a lower rate? Maybe you want to get a personal loan in order to consolidate your debt. It’s worth looking at your debt with a fine-tooth comb to see if there are ways to save. Debt is stressful but it also helps to remember that not all debt is created equal.
Pay Debt with the Highest Rate First
In some cases, you want to pay off the debt with the highest interest rate first. This usually means credit cards and then private loans, student loans, and mortgages. There are different strategies that you can use to focus on paying off debt, such as the debt snowball method, but in order to save money you should pay off the highest interest debt first no matter what type of debt it is.
Take Control of Your Credit
Your credit score and report will play a big role in your financial life. If you monitor your credit then you can make decisions that improve your financial situation for both today and the future. There are plenty of free monitoring apps out there. You can even get customized recommendations as to what you can do to improve your credit score. A higher credit score will give you better interest rates for loans so improving your score is a great way to help you handle money.
Keep Doing What Works
Once you find a system that is working for you to meet your financial goals then don’t get distracted by the other money handling skills or the next best personal finance app. If you are in a rhythm that is working and you are saving money, meeting your financial goals, and building security then keep chugging along. The focus you have toward your plan will pay off.
How to Make Money
How to handle money is one thing; you also need to know how to make money. In order to improve your money handling skills, you may also be wondering how you can make money.
Finding a Side Hustle
Besides your full-time job, there are side hustles that you can do. A side hustle is anything you do to make money outside of your full-time job. You can get a side hustle doing anything but you will have better success if you create something you enjoy and something where you can set your own hours and fee. In today’s society, you can drive for Uber or Lyft but you are limited the number of hours you can drive in a day and how much you get paid is set by the company and not you.
A side hustle where you can manage your own time and decide what you want to charge will have the potential to make you more money. Some of the best side hustles include blogging, online surveys, starting a YouTube channel, and becoming a virtual assistant.
Build a Passive Income
There are a lot of myths about building a passive income and there are a lot of shady products that are sold that will promise you that you can build a passive income. However, it is entirely possible. Most passive income businesses do take some time to set up but if you find the right one then the investment is worth it. For example, blogging can be a good way to make passive income. You can write posts and, once they rank on Google, you can make money for a long time.
Another way to build a passive income is to build a passive income business by starting a company where instead of spending your own time and money you broker other people's time. You can do this in pretty much any industry. For example, instead of walking dogs where you are limited by your hours and the dog walking rates, you can start your own dog walking company and focus on getting clients. This way you can hire others to walk dogs instead of you doing it. You set your own rates and you aren’t limited by the number of hours in a day since you get to hire other people.
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Money Handling Skills for Those Still Living at Home
The tough economy has led many people to move back home with their parents after graduation. However, this doesn’t mean that you don’t need money handling skills and can get away with not working toward your financial goals.
Don’t Assume Parents Will Pay for Everything
If you move back home after graduation, you can’t fall into your old routine with your parents. Don’t expect to live at home for free and have parents pay for everything. You will still need to come up with an arrangement that works for both you and your parents. Maybe you are going to pay a nominal rent or pet sit for free when your parents go on vacation. Be sure to do your part around the house.
You Still Need to Prioritize
Living at home gives you some time to come up with a plan but you still need to come up with a strategy for your next steps. Talk about financial planning with your parents and earn their support. If your parents know how hard you are working, they may be willing to help you out. Open communication is important for avoiding any resentment.
Part of the plan will need to be careful budgeting. Even if your parents are charging rent, it’s not what you would be paying on your own and you can still save money toward your future goals. If you stay at home longer than you anticipated then revisit the initial arrangement you have made with your parents to make sure its works for everyone.
Money Handling Skills for Your Home
The Largest Single Debt You Ever Take on in Your Life
A good estimate of how much of your income you should be devoting to your housing costs is 25%. Generally, you want to keep it below 33% when you include insurance and taxes. If you do have other debt then that range may be too high. When getting a home loan, it’s important to compare interest rates. Even a small fraction of a percentage point can make a big difference when the loan is this large. If you can, also consider making a bigger down payment or shortening the length of the loan.
Many homeowners may be able to save money by refinancing. Home equity loans can also be a popular option. Whether you are getting a new home loan, refinancing, or using your home as equity, don’t just take the first thing you are offered. Compare local credit unions and banks as well as alternative sources of financing. There are plenty of legitimate mortgage online lenders who can help you if you shop around.
Can a Personal Loan Help You with Money Handling Skills?
Once you get out of debt, you have to learn how to be better with money so you don’t get into debt again. A personal loan may help you consolidate your debt and come up with a repayment plan so you can move forward with a budget.
Debt Consolidation
Debt consolidation is one of the most popular and smartest reasons to get a personal loan. It can work for two reasons: to pay off existing high-interest debt and combine different types of existing debt into one single payment to make it easier and more manageable to repay debt. In order to take advantage of the lower interest rates, you do need to have a good credit score.
Consolidate Credit Cards
You can cut your interest rate up to 50% Compare the interest rates on the personal loan and the credit card to see which interest rate is lower. If you have good credit then you should be able to get an interest rate that is lower than your current credit card interest rate.
If you do qualify for a lower interest rate then make sure you can repay the personal loan over a set period, such as five years. Having a shorter repayment period will save you money on interest costs and instill discipline in order to get out of debt more quickly. Use a credit card consolidating calculator to see how much money you can save when you consolidate your credit cards.
To Sum up
Utilizing a CD is one of the major money handling skills that you can utilize when it comes to learning how to be better with money. Money management techniques will usually involve coming up with a plan to pay down debt and meet your financial goals. Once you have a plan that is working, stick with it, and reevaluate your goals as you need to based on how you are meeting them.
If you would, however, prefer to open a savings account instead, here is a list of some that are worth considering:
Your home and credit card debt are two ways that you can improve your financial management and there are plenty of financial management tools, including personal loans, to help out with this. Even if you are still living at home with your parents, you can still practice money handling skills so you can eventually move out and be on your own.