Q:

How can you compare CD rates offered by Salem Five?

A:

Quick Answer

To compare certificate of deposit rates offered by Salem Five, consult the CDs chart on the bank's website, and look at other criteria such as annual percentage yield, benefits and minimum balance, as the site shows in 2015. Also consider the length of the CD term and the CD type.

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Full Answer

Salem Five offers CDs for three months to five years with varied rates of return, explains the bank's website.

The longer the CD term, the higher the rate generally is, according to About.com. When comparing CD rates, consumers should consider whether they can afford to keep their money locked up for a longer time versus a shorter time. An early-withdrawal penalty can encroach onto earned interest. Consumers in doubt about their financial situations may be better off trying a lower CD rate that locks them in for less time rather than a higher rate for a longer time. Consumers should always make sure they understand any penalties for early withdrawal.

Flexibility is another possible reason to choose a shorter CD term even if the rate is lower; if CD rates increase in the near future, consumers can pick a longer-term CD after the short-term one matures, according to About.com. Otherwise, they can be locked into a relatively low interest rate for as long as five years. Many CD investors use laddering, in which they purchase several CDs for different terms.

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