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When interest rates are very low, it's difficult to find a single certificate of deposit (CD) offering a significantly higher rate of return than other CDs. There are a number of factors that affect income from CD investments, and CD investors can take steps to maximize their returns on investment.

What makes CDs attractive as an investment vehicle is not their rate of return on investment but their safety. CDs are insured by either the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Administration (NCUA), and there are few safer investments available for the average investor.

Minimum amounts for CDs are typically $500 and minimum terms are 30 days, although the majority of CDs mature somewhere between six months and five years. Larger deposits and longer terms earn higher interest rates. The interest rates available on CDs are usually just a bit higher than the current inflation rate as determined by the consumer price index (CPI), so virtually any rate higher than the most commonly advertised rates is a good rate for a CD. Online banks and credit unions often offer slightly higher interest rates than traditional banks.

Maximizing Your Rate of Return on Investments With CDs

Check the interest calculation and payment schedule carefully. The advantage of having interest calculated and compounded more frequently adds up over time, so look for a CD that offers more than just annual compounding.

While CDs are traditionally a fixed-rate investment, there are variable-rate CDs available. If you think interest rates are likely to rise significantly over the term of a CD, you can benefit from using a variable-rate CD that allows the interest rate to be adjusted during the term of the CD.

Indexed or structured CDs offer you the chance to earn a percentage of the return on a stock or commodity index. This can make a much higher return than what is available on traditional CDs.

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