No matter where you are in your financial life, but especially if you are learning how to retire in comfort, getting a handle on your finances can be the best thing you do.
One of the first things many people like to do to get a handle on their finances is to start saving more. There are several methods to save and all of them involve finding the best interest rates.
If you choose to just open a passbook savings account at your local bank or credit union or if you prefer to invest in a short or long term certificate of deposit (CD) you should know just what the best interest rates are so you know where to invest your money.
When it comes to opening a CD or savings account, the interest rate is very important, but it isn't the only thing you should consider.
Especially with a CD, you need to be careful. You see with a cd you have to keep the money in the account for the full length of the term.
If you take the money out early you will lose a big chunk of the interest you have earned, maybe all the interest you have earned.
That will not help you achieve your financial goals. Instead take your goals into consideration prior to opening your account.
If you know that you have something you will need the money for in one year, you don't want to put your money into a cd that has a term of 5 years.
Sounds obvious, I know, but many people get so focused on the amount of the interest rate that they overlook this very important point.
If you are opening a savings account, you have some things to consider as well. While most savings accounts will offer you a lot more flexibility in getting to your money, you still may have some restrictions.
Many savings accounts limit the number of withdrawals you can have in a month. If you go over that amount you will be charged a fee.
Also remember that some banks and credit unions will consider your credit score when you are trying to open an account. If you have a bad credit score you may not even be able to open an account.
Though, you don't need to freak out. Many banks do not consider this so you should be able to find a bank that will still allow you to open an account with a bad credit score.
With a savings account you will earn less interest than you would with a cd, in most cases, but you can get to your money more easily.
It really just depends on you and your needs as to which type of account will be best for you. Cd's typically offer a lot higher interest but much less liquidity. Savings accounts will give you more liquidity but you will earn less.
Keep these tips in mind and they will help you find the best interest rates and best type of account for you to help you retire comfortably.
Learn more here about how to retire in comfort
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