bank account questions

[gigan54]

I've recently heard about CD accounts and would like to know how they work, and when interest is built upon it.

let's say I"m opening up an account with a $2,000 deposit for 6 months. would I get the accredited interest rate in my cd account at the end of the 6 month period, or will it come in every month?

also I briefly heard about something called an IDC or ICD account as well, and would like to know what the difference is on this as opposed to a CD. any help would be greatly appreciated.

 

[Quillion]

The interest accrues normally, but you can't touch it without penalties (sometimes not at all) until the term is up.

 

[cletus]

Ok I just thought of a better way to answer the OP but I'm gonna leave my original post at the bottom. Call up the bank, tell them you are interested in getting a CD, and ask them these questions.

Are you FDIC insured?

Do you have any special rates on CDs right now?

What is the APR and APY on the CD?

Does the interest accrue monthly? What day of the month?

Can I choose to have the interest deposited in my account each month instead of keeping it in the CD? (not recommended but it's a option to keep in mind)

What is the penalty for early withdraw? Can I make a early withdraw?

That should clear everything up for you. I've never heard of IDC or ICD accounts so I can't help you there.

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In layman's terms, when you open a CD account you are giving a certain amount of money to the bank for a certain amount of time and agreeing not to withdraw it before then or there would be a penalty charge.

The most common way, but not always, is for the interest to be added to the CD at the end of each month. The APR is how much interest you make each month (or whenever). The APY is how much interest you'll make when the CD matures assuming you don't have them give you the interest each month. Call up the bank and ask if the interest accrues monthly.

There are many calculators online which can tell you how much interest you would be earning.

The penalty for early withdraws is usually 3 to 6 months worth of interest. You can ask the bank rep for more details. If you think you might need the money before it matures then put it into a money market account instead.