Certificate of deposit is an agreement between two parties, where the purchaser agrees to deposit certain funds for specific period of time. Usually it is between any consumer and banks or financial institute or credit unions. The arrangement is with an understanding that during this specific period of time, the consumer would not withdraw the money for any reason. Doing so will attract penalties paid through charges from the fund or the interest. Interest rate over an amount depends on the amount deposited, the period of time it is deposited for and also varies with different banks, credit unions and financial institute. FDIC certificate of deposit is the CD issued from the bank that is insured from the government. If the bank closes or is unable to pay the amount or interest for any reason, this insurance allows the bank holding to be paid off.
FDIC means Federal Department Insurance Corporation which certify the terms of the CD and approves of its actions. Investors feel secure when handling such CD investments because they know beforehand that risks of such CDs have been considerably mitigated. FDIC certificate of deposit can be for over a six months period and also available for ten years period or more time. Such famed investment (certificates of deposit) carries insurance of up to hundred thousand dollars per person from government. Sometimes it goes beyond 300,000 dollars for certain investors.
This is the reason before tendering money to bank, any institution or credit union, one must ensure that the agreement they are entering for is within the safety standards of the FDIC. It is a sort of insurance that can protect someone’s financial future. This is also the reason for which the business owners are one amongst those who consider certificates of deposit profitable if it is FDIC insured. Apart from giving owners the opportunity to investment in risk free venture FDIC covered CDs offer interest rate that do not deteriorate within the entire term of the investment, no matter if the economic conditions are favorable or not.
FDIC certificate of deposit issued by the bank bears a logo. Even credit unions have such insurances like FDIC called National Credit Union Administration or NCUA logo when their certificates of deposit are insured. If logo is not enough to ensure that the bank or credit union partner for your investment is FDIC insured, one can even check with the government or also go through the financial performance of the industry in previous years. There are NCUA and FDIC sites from where one can collect information on such things.
If for any reason the bank site does not carry the logo, one can call the institution to inquire on CD rates and the insurance policy and to know whether the investment is protected. FDIC certificate of deposit is available at varied rates for residents of particular state. There are few banks that cater the same rate of interest for the amount deposited to all residents of any state in the country. One should read the offer documents and compare the terms before agreeing for the arrangement.