Certificate of Deposit (CD) accounts can be difficult to keep track of and manage, especially if you have several of them. Properly managing them is key to being successful with certificates of deposit.
How Often Should I Check My Account?
Depending on how many CDs you have, this answer can vary. For most people, keeping track of a CD account is simple, and the amount in the account doesn’t change drastically. Unlike mutual fund accounts, the return on the account and the balance of the account do not change with market factors. Interest should be the only item within the account that is not static, and the expected interest rate on the account is easy to calculate, since rate does not change. Checking on the account once each month should be sufficient for most. For investors with several CDs spread across multiple accounts, checking more frequently, such as weekly or biweekly, should be fine.
How Often Should I Check Interest Rates?
This really depends on the type of account that you have. For example, if you have a standard CD, a rise or fall in interest rates should not matter to you since you cannot change the rates you currently have on your financial instrument. If you are looking to invest more money in a CD, then you should be checking interest rates once every two weeks, since they are not likely to rise and fall very drastically within that short time frame. You should pay attention to any news that the Federal Reserve puts out since it’s the fiscal and monetary policy at that level that most often affects the rates.
Some banks and institutions allow their investors and depositors to take part in CDs that offer interest rate protection, which allows them to change their interest rate if they want to when the rates rise. These often only allow you to change your rate once a year or less, and sometimes they offer lower starting rates or require higher initial deposit amounts. Even with these limitations, these CDs can have great value if there is a sudden leap in interest rates. For accounts that offer this, check interest rates at least once a month, and keep an eye on the news.
Should I Move My Money to a Different Bank?
Sometimes it does pay to move your money to a different bank to receive either better perks with the CDs, such as the ability to add and withdraw for no cost once a month, or higher interest rates. This would require either moving the entire financial instrument or waiting for the instrument to expire and then just moving the money itself into a new CD account. If you have a large sum of money in a CD that you want to move, it could be worth the fees to move the entire CD instead of cashing out and getting a different CD at another bank. It is all a matter of cost and benefit.
CD account management is something that should not be taken lightly. Many people have a lot of money in CDs, and those are the people that should be checking interest rates often, checking their account balance for the proper deposit of interest, and considering the implications of moving to a different institution.
