By BankingMyWay.com Staff
CDs or Certificates of Deposit are generally safe, reliable investments that carry very little risk. In essence, CDs are high-interest savings accounts in which you deposit your money for a pre-determined amount of time. After this term, you can withdraw the money and any compounded interest, or you can roll everything over for another term.

Traditionally, the longer you leave your money in the account per term, the more you can earn in each period of investment. If you choose to withdraw your money early, you are likely subject to a fee or penalty. So how do you find a reliable broker? Here are a few choices:

The Old Standards

If you don’t know a lot about CDs or other investments, trusting those you already do business with can be one option. This means approaching your local bank, about their CD offerings, which, as of April 2009, range on average from .50% to around 1.4% for a minimum deposit of $5,000. You can also use the industry standard providers of brokerage services, such as Merrill Lynch, Charles Schwab and Fidelity Investments. Be aware though that these conglomerates often charge fees for the personalized service they provide, but they can be superior options if you like a lot of financial hand-holding. 

Online Options to Consider

For the financial do-it-yourselfers out there, online brokerage firms can be very easy to use. A lot of online competition has made buying CDs easier than ever and has also kept interest rates competitive, even in tough economic times. Online-brokered CDs are being offered at up to 3% or more (sometimes with no minimum deposit) with services like Scottrade or ING Direct (Stock Quote: ING). You often have the ability to swap CDs for other brokerage funds or money market products with online brokers as well.

You can often choose between traditional and flexible CD terms online. Flex CDs allow you to withdraw your money at any given time without penalty. The trade-off is usually that the minimum deposit required is up to 10 times higher than traditional CDs ($5,000 versus $500 to open an account).

Things to Remember

Keep in mind that online companies provide little to no financial assistance or guidance, so research is your responsibility. BankingMyWay.com has an updated comparison tool for CD rates that can help you find the best product for your needs. If you have a local hometown broker that comes highly recommended from friends, why not compare his rates with the national average?

Warning Signs

Check with the Better business Bureau to make sure former clients haven’t filed complaints about a potential broker.

Also, be sure to ask for licensing proof to ensure that the broker is approved to conduct transactions in your state.

Finally, make sure that your deposit is FDIC insured in case of bank failure.

— For more ways to save, spend, invest and borrow, visit MainStreet.com.