5 Quick and Dirty Facts About Certificates of Deposit

1. FDIC Certificates of deposit are a safe type of investment

Some forms of investments carry more risk than others. For instance, some stocks fluctuate up and down, which could mean you make a lot or you lose a lot, and there is no way to absolutely predict which will happen. With FDIC certificates of deposit, there is a very low risk of loss, but a guaranteed rate of return, making it a stable investment option. Plus, the investment is insured by the FDIC.

2. Gains are taxable

After the security of deposit matures and the gains are paid to you, the amount you made over your original investment amount is considered taxable income. The exception is when the certificates are structured in a tax-differed or tax-free account, but those are not typical features and need to be discussed with the offering bank.

3. They are best for short term investments

FDIC certificates of deposit are best for set amounts of money to be invested for a short period of time, such as $5,000 for 5 years or $500 for 5 months. Because there is typically no access to the money, and because of the relatively lower return rates than other investment options, CDs are not generally considered for a long-term investment.

4. Withdrawing early will require penalties to be paid

For most certificates, if the money is needed before the time period has passed, then serious penalties for withdrawing early will be applied to the payoff amount. This investment environment is best for cash that can be applied and not touched for the few months or years of the contract.

5. A few specialty options are sometimes offered

Most FDIC certificates of deposit hold your money for a fixed time in return for a fixed rate. However, some allow you to raise the interest rate if the market improves or to make early withdrawals. Others don't pay out, but instead reinvest the funds into another CD for another term. The key to deciding if these specialty offers are worth your time is to compare the offered interest rates and time periods with the added benefits.

If you would like to learn more about FDIC certificates of deposit in Austin, visit Green Bank.

5 Tips for Save Online Banking

With the rise of computers and mobile devices has come a surge in the popularity of online banking. There are a number of conveniences and benefits, but it is always good to be wise with your online dealings. Thieves are just as happy to take advantage in the virtual world as they are in the real one.

1. Be careful with your password

Being password savvy means both protecting its secrecy and picking something complicated. An unusual word with symbols or numbers substituted for a few letters is perfect for online banking. The same goes for the PIN. 1-2-3-4 isn't very secure, but your high school locker combination might be more difficult for hackers to find.

2. Know the bank's URL

Some thieves go to great efforts and set up fake websites that look a lot like a real bank. To make sure you end up on the right page, type in the bank's actual website and always check the address bar for the proper information. Often, there will be a lock icon added, to indicate a secure site.

3. Set up alerts

One of the best new conveniences that comes with online banking is the ability to set up reminders and alerts. With only a few easy steps, you can set auto texts, emails, or calls to be sent to you if a charge over a certain amount is made or if your balance drops below a certain level.

4. Use encrypted data

Encrypted data means that the content sent and used on the website is put into a code by scrambling the data that only your secured login and the bank can read. This makes it difficult for hackers to simply pull your information.

5. If something looks fishy, it probably is

Banks take the security for their online banking customers seriously and spend a lot of money to prevent hackers and thieves. They wouldn't do anything that could cause you to be confused or to compromise your information. They would never ask for sensitive information in a call or email, especially one that wasn't initiated by you. If you receive an odd communication, it is best to not reply and contact your bank immediately to check the activity.

If you would like to learn more about online banking in Houston, visit Green Bank.