CD's vrs. Savings Accounts Which is Better?

Discussion in 'Archived Threads 2001-2004' started by Glenn Overholt, Aug 14, 2002.

  1. Glenn Overholt

    Glenn Overholt Producer

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    I have a ton of spec sheets with different percentages on them, but I am having trouble understanding it. Why are there so amny options and what should I look for to get the best return? I had thought that the longer the 'bank' keeps your money and you can't get at it, the higher the return would be, but the charts don't agree with my twisted mind.
    Help!

    Glenn
     
  2. Jonathan Smith

    Jonathan Smith Stunt Coordinator

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    The longer the term on the CD, the higher percentage you should get at the same bank. A different bank may have different rates altogether. CDs should have higher percentages than savings accounts (again at a given bank). Rates can differ substantially between banks, so maybe that has something to do with your confusion?
     
  3. Paul D Young

    Paul D Young Second Unit

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  4. James Q Jenkins

    James Q Jenkins Stunt Coordinator

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    I prefer a Money Market account to either a CD or a Savings account.
     
  5. Glenn Overholt

    Glenn Overholt Producer

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    Phew! I see why I'm getting confused now. I've got Money Market available with the savings accounts, and those rates are better than the regular ones.

    The CD ones aren't tied to Money Market. I'd guess that this rate goes up and down with something, but if it's the stock market forget it!

    Glenn
     
  6. DaveF

    DaveF Moderator
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    "Better" depends on your needs and financial situation. CDs generally provide higher interest rates than a regular savings account and can be better than a money market account. The trade-off is you can't withdraw the money (without penalty) until the CD is mature. The longer the term of the CD, the higher the interest rate.
    And unlike buying stocks or bonds, CDs are risk-free since they are FDIC insured, like savings accounts.
    I think CDs are just one part of an overall savings and investment plan. And if you're just starting out, but do have a healthy savings account, they are a good next step.
    Of course, I'm just some guy on the web, so take what I say with a grain of salt [​IMG]
     
  7. SteveA

    SteveA Supporting Actor

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    Right now, the interest rates are pathetically low on savings accounts, money markets, AND CDs - so don't expect a high return on any of them.

    That being said, I prefer a money-market account because the interest rates are higher than regular savings accounts, you are allowed to write checks against the account (3 a month), and there's no penalty for withdrawals. And the accounts are FDIC insured to boot. Unless you're definitely going to be locking the money away for a long time, money market accounts are the way to go. If you're definitely not going to touch the money for 5 years or so, you should think about a more aggressive investment, such as (gasp!) stocks or mutual funds.

    Anyone else think that now is a GREAT time to buy stocks? I certainly do.
     
  8. John_Kiger

    John_Kiger Agent

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    I agree with DaveF as to the safety of CDs vs. outside investments. A savings account can offer immediate access without penalty, however, beware of service charges on low balance savings accounts. The norm around here is a service charge monthly for savings balances under $100. When rates are 1/2%, who cares about rates anyway. Sometimes a 0% no frills account is the best way to avoid service charges.

    --service charge hater
    John
     
  9. Josh Lowe

    Josh Lowe Screenwriter

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    It is an excellent time to buy stocks.

    A certain biotech company recently announced it had an HIV vaccine in 3rd stage FDA trials, with initial results coming early next year. I bought several shares of this company at $5.65 each. This was before the market did its ugly little nosedive last month. I ended up selling them at $6 something and did OK. I just checked that company today and their stock is now at _$9.53_. If I had held I would have made a killing. And I am a complete amateur when it comes to picking stocks - all you need to do is be observant, patient and do your homework and you can profit nicely even in this "bad" market.
     
  10. MikeAlletto

    MikeAlletto Cinematographer

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  11. Philip Hamm

    Philip Hamm Lead Actor

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  12. DaveF

    DaveF Moderator
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  13. Todd Hochard

    Todd Hochard Cinematographer

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  14. James Q Jenkins

    James Q Jenkins Stunt Coordinator

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