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5 common mistakes to avoid while opening a CD

5 common mistakes to avoid while opening a CD

A certificate of Deposit or CD is a type of savings account option that many explore for financial security. CDs are known for their guaranteed and stable returns, making them a great investment for those who want to play it safe. Banks and credit unions offer them for a specified maturity period at interest rates. However, one can make some rookie mistakes when dabbling in such an investment. One can avoid these pitfalls while opening a CD.

Opening fee-based account
Banks often need one to have a checking account before applying for a CD. However, these banks also have a cost associated with opening a checking account. According to statistics from 2022, the national average return rate of CDs ranges from 0.03% to 0.39%. However, CD rates keep changing, and some banks are providing even 5% APY as of October 2023.

A fee-based account can reduce the returns extensively. For instance, if one takes the national average return rate, say Chase Total Checking, which charges a monthly fee of $12, one may end up paying more in fees than one might earn in returns. To avoid this, ask the representative of the bank if there is a minimum deposit requirement that can help you waive the fee. This way, one can save more money and gain returns.

Neglecting to shop around
Most amateur investors who are new to the CD savings method do not compare rates that are available for CDs. According to some reports, the best rates are available with various banks depending on the investment’s tenure. The higher the investing period, the higher the return. Therefore, it is advised to keep looking for different rates across the market. Ask for referrals, read reviews, and compare rates among banks, credit unions, or other credible financial institutions. This way, one can choose the competitive rate and meet the personal financial goals. Some of the options include:

  • Total Direct Bank – Three to six months
  • Credit Human – 1 year to 18 months
  • Newtek Bank – 2 years
  • Luana Savings Bank – 3 years
  • Wellby Financial – 4 years
  • Farmers Insurance Federal Credit Union – 5 years
  • Apple Federation Credit Union – 10 years

When it comes to opening a new account, here are some of the best rates available as of October 2023 for investors.

  • CIT Bank offers an Annual Percentage Yield( APY) of 5% and a minimum $1,000 deposit. There are no account opening fees; it’s a six-month CD investment, and there is daily compounding interest.
  • BARCLAYS offers 5.50% APY for 12 months with zero minimum deposit.
  • American Express National Bank asks for a minimum of $1 and 5% APY. There are no fees, and customers can use the 24/7 post-sale service to clear any concerns or queries.
  • Discover requires a minimum deposit of $2,500, with an APY of 4%. Its investment plan has a duration of five years, and there are no monthly fees, which can result in significant savings. Investors can also lock in their CD rate to guarantee their returns.

Opening long-term CDs during rate hike
When interest rates are on the rise, it may not be the best time to invest in a long-term CD. This is because if an investor locks in an interest rate of, say, 0.50% APY, and in a couple of months, the interest rate increases to 0.75%, they miss out on the opportunity to earn that extra 0.25%. Therefore, experts advise that when rates are increasing, it is better to opt for short-term CDs rather than long-term ones.

Opening a CD when in debt
Many people may consider opening a CD account as a quick fix to pay off their debt. However, this approach may not be the best financial choice. If the interest rate on the existing debt is higher than the interest rate the CD can earn, then it might not be a sound decision to open a CD. Before making any financial decisions, it is best to calculate and compare the potential benefits of different options to pay off the debt as quickly as possible.

Overlooking early withdrawal penalties
Always check for terms and conditions before investing in a CD. This saving method has a maturity withdrawal period, and in many cases, there are penalties for early withdrawal if the CD is set to a particular tenure. These penalties may vary from one bank to another, so it is imperative to read the fine print or speak to the sales executive in detail about any uncertainties.

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Top debt settlement companies in the USA

Incurring debt is really common in this age and era as everything has become extremely expensive, from college education to owing a house. If you ever feel that your debt is too large and you may not be able to pay it in time, then you can seek the help of a debt settlement company. These companies essentially communicate with your creditor to try and lower your debt and the rest of it is typically forgiven. Given below is a list of the top 9 debt settlement companies in the USA. National Debt ReliefIf you have USD 7,500 or more in debt, then the National Debt Relief can be a great choice for you. It is one of the most prominent debt settlement companies in the country. The initial consultation is offered for free, but you will have to pay 15-25% of the settled debt amount as a fee. Freedom Debt ReliefThis a dedicated company that offers debt relief services to people who have at minimum USD 7,500 to USD 10,000 in debt. 15-25% of the settle debt amount is charged as fee once a settlement is negotiated, and in return, they offer the possibility of settling the debt within 24-48 months. CreditAssociatesCreditAssociates surely is one of the top 10 debt settlement companies because of their satisfying services. They help customers who have USD 7,500 or more in debt and charge a portion of the settled debt. You can also use their services via mobile apps. Accredited Debt ReliefGenerally, people with a minimum debt of USD 10,000 use the services of companies such as this to lower the due amount; however, Accredited Debt Relief has no minimum amount stated on their website. They take two to four years to complete the process and the fee is charged only after that. CountryWide Debt ReliefThey recommend that customers with USD 10,000 or more in debt avail their services to get their debt resolved. They promise to lower the debt by 20% or charge nothing. Their track record shows a great success rate. United Debt CounselorsIf you are looking for the top 10 debt settlement companies, United Debt Counselors should be considered. This company offers its services through professional debt counselors to help you settle credit card or unsecured debts. Century Support ServicesCentury Support Services can help you reduce your debt effectively. The consultation is initially free and the fee is charged only after the first payment is given to the creditor. Subsequent fees are taken in a similar fashion.Elite Financial ServicesThe company offers to settle your unsecured loans in as short a duration as 12 to 36 months. They provide debt analysis for free and charge the debt settlement fee only after the process is completed. New Era Debt SolutionsNew Era Debt Solutions has been providing debt settlement services for over 20 years. On average, they have helped reduce around USD 250,000,000 for their clients can reduce your debt by 47% of the original amount. Now that you know the top 10 debt settlement companies in the USA, you can compare their fees and services to determine the best one for your needs.

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Top 4 apps for credit building to improve credit scores

A credit score is a number between 300 and 850 that records one’s creditworthiness. Those with higher credit scores are more likely to receive loan approval and reduced interest rates. This score is based on one’s credit history, drawn from factors such as the total number of accounts in their name, types of loans, length of credit history, debt utilization, etc. Several credit-building apps have emerged on the market to help people improve their credit scores. How credit-building apps work Credit-building apps tend to offer three distinct services. These are as follows: 1. Credit monitoring With major credit bureaus, there are restrictions on how often one can access their credit score. However, some apps offer credit monitoring services to allow one to check their score daily, weekly, or monthly. They also offer tips and suggestions for how to improve one’s score. Lastly, they also monitor activity on one’s accounts, sending alerts for any new accounts or suspicious activity that may occur. 2. Credit building lenders Some apps also offer credit-building loans. As the name suggests, these are meant to help build one’s credit score. Since one makes regular payments in a short period of time, these loans can significantly improve one’s credit score. 3. Credit reporting Several apps also help boost credit scores by reporting alternative payment data. Since these payments (such as rent or utilities) are not considered in traditional credit reports, they may help improve credit scores.Top credit-building apps to use Here are some top apps to use to boost one’s credit score: 1. Experian Boost Hosted by the credit bureau Experian, this app is ideal for those with a history of rent and utility payments. It works on the premise of credit reporting, including alternative payments that aren’t usually reflected in one’s credit score. To use this, one only needs to sign up, link their payment accounts, and choose their positive payments to be reported. While it may not be able to fix poor credit, it is a great, inexpensive way of boosting one’s score instantly. 2. SeedFi Those who do not have any credit or borrowing history must try using SeedFi to boost their credit scores. This app offers lender services, with interest-free loans beginning at as little as $10. Users can pay this loan back within the payment cycle. SeedFi then reports this positive payment to credit bureaus, helping improve credit scores. Additionally, this service is free to use, helping first-timers build their credit without breaking the bank. SeedFi also offers Borrow and Grow loans, which offer users cash immediately upon approval. This loan includes a sum that goes into a savings account. Once the loan is paid off, users access this account, effectively acting as an emergency fund. However, this service typically has high interest rates (12.96-29.99%), which could prove costly over time. 3. KikOff KikOff is ideal for those looking to make small monthly payments. According to experts, this service can help users improve their credit score by 58 points. Sign-up on KickOff does not require a credit check. With their credit account, users are offered a small line of credit ($750 per month) to make purchases from the KikOff store. Users can pay these back in the form of small monthly payments to help boost their credit score. The account has a $5 monthly fee that is part of the credit line. This helps one build credit, even if they do not borrow anything else. Additionally, the service does not have associated interest charges or late fees, letting one focus on covering the principal amount easily. 4. CreditSesame CreditSesame is a great option for those looking for a credit reporting app. This free service also offers personalized advice to help users improve their financial standing and boost their credit scores. It operates by recording and reporting a portion of one’s payments to the major credit bureaus. This evidence of on-time payments helps improve one’s credit scores. The app also offers cash rewards for services one avails themselves of on their platform. Users can also avail themselves of a free checking account and a new debit card linked to it for improved cash rewards on the app. Credit scores can have a significant effect on one’s life. They are used to determine one’s reliability by prospective employers and to decide interest rates and approvals on loans, credit cards, mortgages, etc. by lenders. Using the credit-building apps mentioned above can help people improve their scores and establish sound financial footing for the future.

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