Physical Address
304 North Cardinal St.
Dorchester Center, MA 02124
Physical Address
304 North Cardinal St.
Dorchester Center, MA 02124
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If you’re seeking a way to enhance your savings, a certificate of deposit (CD) could be a great option. CDs offer a solid return in exchange for keeping your money in the account for a set period. At O1ne Mortgage, we can help you understand how CDs work and how to calculate your potential returns.
Banks, credit unions, and other financial institutions offer CDs with various terms, minimum deposit amounts, and interest rates. Typically, the longer the term, the higher the interest rate and earnings. However, some institutions may offer promotional rates for shorter terms.
CD terms can range from one month to ten years, with some requiring no minimum deposit and others requiring amounts between $250 and $2,500.
When selecting a CD, pay close attention to the annual percentage yield (APY), which indicates the interest you’ll earn over a year, including compound interest. For example, a 4% APY means you’ll earn 4% of your total balance annually. Compound interest can be added daily, monthly, quarterly, or annually, but is usually done daily or monthly.
Consider opening a CD if you want to:
It’s best to invest in a CD only if you don’t need the money before the maturity date, as early withdrawals often incur penalties.
To calculate the compound interest for a CD, you’ll need the principal amount, interest rate, compounding frequency, and CD term. Use the formula:
A = P(1 + r/n)^(nt)
Where:
If math isn’t your strong suit, online calculators can simplify this process.
Here are four ways to increase your CD’s APY:
CDs can offer attractive returns, potentially more so than traditional savings accounts. By understanding the terms and calculating potential returns, you can enhance your savings strategy and achieve your financial goals.
For any mortgage-related needs, call O1ne Mortgage at 213-732-3074. We’re here to help you make the most of your savings.
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