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Explore Different Types of CDs with O1ne Mortgage

At O1ne Mortgage, we understand the importance of making informed financial decisions. Certificates of Deposit (CDs) are a unique savings option that can help you achieve your financial goals. Here, we explore various types of CDs to help you determine which one might be the best fit for you. For any mortgage-related needs, feel free to call us at 213-732-3074.

1. Traditional CDs

Traditional CDs are standard savings accounts with a fixed-term maturity period, typically ranging from three months to five years or longer. They offer higher interest rates than regular savings accounts because you must leave your funds in the account until the maturity date. These CDs are insured by the Federal Deposit Insurance Corp. (FDIC) for up to $250,000 per owner, making them a reliable savings option.

2. No-Penalty CDs

No-penalty CDs, also known as liquid CDs, allow you to make withdrawals before the maturity date without incurring a penalty. While the annual percentage yield (APY) on these CDs is usually lower than traditional ones, they offer the flexibility to withdraw funds if needed, making them an attractive option for savers who want both security and accessibility.

3. Jumbo CDs

Jumbo CDs require a larger minimum deposit, typically at least $100,000, but offer higher interest rates. These CDs are ideal for those with significant savings looking for a low-risk investment. However, be aware that FDIC insurance covers up to $250,000 per account holder per bank, so large deposits over that amount may only be partially insured.

4. Bump-Up CDs

Bump-up CDs allow you to change your interest rate if the issuer raises the rate on the same term CD after yours is opened. This feature can be beneficial if interest rates rise during your CD’s term. However, most issuers only allow you to exercise this option once, so it’s essential to compare rates before signing up.

5. Step-Up CDs

Step-up CDs automatically increase your interest rate at scheduled intervals, such as every six months or annually. This type of CD can be advantageous if you anticipate rising interest rates during your CD’s term. However, the starting interest rate may be lower than a traditional CD, so it’s crucial to consider this before committing.

6. Brokered CDs

Brokered CDs are purchased through a broker or brokerage firm and often offer higher yields than standard CDs. They allow you to hold multiple CDs in one brokerage account and may provide the option to sell the CD on the secondary market without a penalty. However, ensure your deposit is FDIC insured and be aware that brokered CDs may be callable, meaning the issuing bank can end the CD before its maturity date.

7. IRA CDs

IRA CDs can be held within an individual retirement account (IRA) and offer higher interest rates along with the tax advantages of an IRA. These CDs are suitable for those who do not need to access the funds until retirement, as early withdrawals may incur penalties and fees.

The Bottom Line

Choosing the right CD depends on your financial situation and goals. CDs can be a beneficial option if you have a significant amount of money you won’t need in the near future. They offer higher earnings than traditional savings accounts without the increased risks associated with stocks and bonds. Before committing to any CD, ensure you understand the terms and potential penalties for early withdrawals.

For personalized advice and to explore your mortgage options, contact O1ne Mortgage at 213-732-3074. We’re here to help you make the best financial decisions for your future.

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