What happens when you have a CD that will expire soon? Should you cash out the money or reinvest the funds into another CD? It is always important to compare rates online to find out which banks are offering the best interest rates on CDs and other investments. You need to be able to find an investment that is going to provide you with the right type of interest rate for your account, giving you the best returns possible for your investments. Here are some suggestions on what you should do with a CD that is about to expire.
CD Ladder
A great option to do is to create a CD ladder. This will allow you to reinvest the money and to have the money returned to you over a series of months or years. Some people like to do short-term CD ladders where you end up getting money back every few months. Others like to do long-term CDs where you end up having money coming every year or so. This way you always have “income” to use when you need it. Just compare rates to make sure you are locking into the best rates possible for your CD to get the highest returns.
Money Market
If you don’t like to have the money tied up in a CD where it has to stay locked for a few years, money market accounts may be the best option for you. A money market account will allow you to pull the money out as needed and it gives you the flexibility you need with your accounts in the event that you have an emergency. The other nice option that you have with money markets is that the interest rates are fairly close to what you are seeing with CD accounts right now.
Online Savings Account
The interest rates for online savings accounts are not as high as what you will see with other accounts like CDs and money markets but they are about 5 times higher from the savings accounts of the standard saving account at your local bank. This is a great way to earn more money in interest and to continue growing your money in a low-risk account.
