Depending on their financial situation, some people keep a certain amount of money in savings accounts or other accounts such as certificates of deposit. The latter is one type of fixed deposit. These types of accounts involve an agreement between the individual and the financial institution, in which, unlike a savings account, the funds are locked for an agreed-upon period of time and therefore available for the financial institution to lend. To get the best fixed deposit rate, investors should use the wealth of information available, including information about the best rates at any financial institution where the person holds an account. In general, getting the best fixed deposit rate is achieved by finding a stable institution, investing a significant amount, agreeing to a longer term and perhaps, investing when inflation is high.
Many online resources provide daily updates of the best annual percentage yield (APY) fixed deposit rates. In fact, many of these sites allow visitors to search for the countries offering the best rates in addition to searching for individual financial institutions. Before deciding on a specific fixed deposit option, always read the fine print and terms of the contract.
Be careful when using these resources, because although many of the sites provide current information, there are often caveats. For example, some offers are only available to new account holders. In addition, some of the websites have errors in their reported data. Even when the error amounts to a difference of a fraction of a percentage point, depending on the amount the person invests, it could amount to a significant a sum of money. Investors should always do their due diligence and check the fine print before signing over or transferring any funds.
Finding a stable financial institution is as important as finding the best fixed deposit rate. In general, it is true that credit unions offer lower fixed deposit rates compared to typical banks. The upside of that statement is that credit unions are known to be extremely safe and stable. On the other hand, some government bonds offer very high fixed deposit rates. The downside is that many of these governments have frail economies and bring significant risk to the investor.
While researching specific financial institutions, it is important to understand some other generalities surrounding fixed deposits. For example, it is often true that in order to get the best fixed deposit rate, an individual has to invest a significantly larger amount of money. The bank is guaranteed to have more funds to lend and can offer a better rate. One example of this is a jumbo CDs, which typically requires at least $10,000 US Dollars (USD).
It is also often true that financial institutions will offer higher rates if the investor agrees to a longer term. A one-year CD will most likely have a lower fixed deposit rate compared to a five-year CD because the financial institution is guaranteed to be able to use the money to lend over a longer period of time.