CD Strategy

Maximize Returns With a CD Strategy

Are you just buying CDs and hoping for the best? How can you maximize your returns? By using a CD strategy, you can make informed decisions about which CDs to buy and how to arrange your holdings. Use a different CD strategy for different goals, and you’ll make the most of your money.

Why Use CD Strategy?

You probably have a goal when you buy a CD, and that goal is essential to picking the right CD strategy.

Some people think that buying the highest rate available on their bank’s website is the best CD strategy. It might work out, but you might be able to earn a higher lifetime return if you put a little more thought into it.

To pick the right CD strategy, you should consider:

• What is that money for?
• Are you willing to lock it up?
• How long until you’ll need the funds?
• Are interest rates going to get better or worse, and when?
• How much are you investing at any given bank?

CD Strategies

Once you know what you need, you can pick a CD strategy that will help you reach your goal. Some of the most common strategies are:

• Bullet strategy - for a target maturity date
• Barbell strategy - when intermediate-term CDs don’t pay off
• CD Ladder - a systematic rotation
• CDARS - for maximizing FDIC coverage

Now it's time to implement your CD strategy. For more on buying CDs see:

• How to Get the Best CD Rates
• CD Interest Rate Scorecard
• How Brokered CDs Work