By James Dimmitt

If you are looking for a safe investment and you have between $100 -$1,000 to invest, you should consider a certificate of deposit or CD. When purchased through a bank, CD’s are federally insured up to $100,000.

When you invest in a certificate of deposit, you are lending your money to the bank for a set period of time at a fixed rate of interest. At the end of that time period, the bank pays you back your investment with the interest you’ve earned. The annual interest earned is reflected by the annual percentage yield or APY.

There are several details to consider before investing in a CD. First, find out when the CD will mature? Banks offer certificates of deposit with maturities ranging from 3-months to 10-years or more. Figure out how much to safely invest and how long you feel you can leave that money alone so that it earns interest. Also, make sure you get the maturity date in writing.

Second, you’ll want to know the annual percentage rate (APR) you’ll earn on your investment. Investing larger sums for longer terms usually earns the best interest. However, even a small investment can earn you higher interest than a traditional passbook savings account.

Next, find out how the interest is compounded – daily, monthly, or annually? Daily compounding is best because it earns you more interest. You can shop for the best CD rates at bankrate.com or check with your personal banker.

Shopping on the internet, I found rates for a $1,000 1-year CD in my local area ranging from 2.96 to 3.97 APR and a 3.00 to 4.05 APY respectively. So if I invested $1,000 at 2.96 APR, at the end of 12 months I’d get paid $1,030.00 by the bank (figures computed with interest compounded monthly). That same $1,000 invested at a rate of 3.97 APR would return $1040.43.

Interest rates are usually locked in for the term of the CD, although some banks allow you to take advantage of higher interest rates by converting your CD. This type of CD is called a ‘step up’ CD. Generally, banks will only let you ‘step up’ once during the term of the CD.

What happens if you withdraw your money before the certificate of deposit matures? Your bank will impose an early withdrawal penalty, which can vary depending upon the maturity date and the amount invested. It’s important to invest only money you can truly afford to leave alone for the term of the CD.

As with any investment, make sure you understand all the terms, fees, and any penalties before you purchase.

Copyright 2005, yourfreecreditreportnow.com

About the Author: James is editor of “TO YOUR CREDIT”, a free weekly newsletter with tips to help you manage your personal finances. Subscribe today and receive his e-book ‘IDENTITY THEFT- How To Avoid Becoming the Next Victim!’ and other money-saving bonuses by visiting yourfreecreditreportnow.com

Source: isnare.com

Permanent Link: isnare.com/?aid=6633&ca=Finances

By Zhanna Krupnikov

A home equity line of credit (or HELOC) is a loan with a maximum amount fixed where the collateral is the borrower’s equity in his/her house.

Home equity is the difference between the value owed on a home and the value of the worth of the home. This amount of equity established on your home will determine the credit limit you receive on a HELOC.

Unlike a home equity loan where an entire sum is advanced at once, HELOC is a line of credit allowing you to withdraw over a period of time, subject to the maximum limit fixed.

How does Home Equity Line of Credit work?

To be eligible for a HELOC, your payments must be up-to-date and you must have a good credit standing. Since this is a line of credit based on your home equity, you must have a substantial amount of equity standing in your home.

With the open line of credit under HELOC, you can borrow and repay as per your requirements as long as you do not exceed the credit limit. Note that, HELOC comes only with a variable interest rate, which is based on prevailing prime rates. Also, the repayment of this type of line of credit is extremely flexible.

The advantages of Home Equity Line of Credit

1.Unlike home equity loans, HELOC do not require renewal as long as the credit limit is remaining.

2.If your home equity grows, whether by an increase in your property value or a reduction in your mortgage debt, you can ask for your maximum credit limit to be recalculated.

3.The interest on HELOC is tax deductible.

4.A HELOC does not attract weary views from creditor or impact your credit ranking negatively as a second mortgage may.

Watch out for the following:

1.However, since the interest rate on home equity line of credit is variable, keep a tab on the prevailing interest rates. Even the smallest spike can cause your repayment balances to rise rapidly.

2.Also, since home equity line of credit is secured against your house, any default in repayment can result in foreclosure.

Thus, it is advisable to consult a lending professional agent before taking up home equity line of credit. This type of financing should be considered carefully, and the homeowner must read all the fine print and discuss all fees before securing such a loan, since you could lose your home if you fail to repay the amount borrowed. Home equity is the difference between the value owed on a home and the value of the worth of the home. This amount of equity established on your home will determine the credit limit you receive on a HELOC.

Unlike a home equity loan where an entire sum is advanced at once, HELOC is a line of credit allowing you to withdraw over a period of time, subject to the maximum limit fixed.

For more information, you may contact:

Allegro Mortgages Corp. – Best Broker for All Your Financing Requirements (416) 987-0008

Check out amortgages.ca for more information on different refinancing options.

About the Author: Please visit the website Amortgages.ca if you are interested to learn more about home equity line of credit. The website also provides information on mortgages Concord and best mortgage rate Thornhill.

Source: isnare.com

Permanent Link: isnare.com/?aid=577818&ca=Finances