CDs aren’t the Place for Your Money

April 4th, 2010 | by Allison Thompson |

You may remember the days when you would see advertisements in the newspaper or on the windows of your bank offering interest rates as high as three, four and even five percent on certificates of deposit (CDs). Those days, unfortunately, are long gone and now it is more likely that you see certificate of deposit rates going for less than one percent, which consumer money specialists say is pathetic and not the best place to invest your money. Experts are not the only ones warning against these types of investments. Current and former CD investors tell consumers to heed the warnings as well.

Consumers Say No to CDs

Regina Bell of Van Nuys, California says, “Shocking, it’s all been taken away from me and I’m deeply upset. I was used to getting that income, counting on it,” in reference to her former investment in certificates of deposit. Regina Bell is but one of the multitude of conservative investors that invested their money in certificates of deposit, believing that the return on investment was high enough and the risk was low enough to use the certificates of deposit as a way to save for retirement. Now that CDs are paying 0.15 percent, however, the investment isnt getting them anywhere near where they need to be to retire in comfort, let alone retire in style.

Financial Experts Speak up about CDs

Brian Gilder, a certified financial planner, says, Its not even a certificate of deposit. It’s a certificate of depreciation to me.” Brian Gilder advises Regina Bell and his other clients to be proactive about turning their investment situation around. Rather than wait and expect the bank to renew the certificate of deposit at a higher rate, make some changes with your money. Some suggestions are to move your money into national municipal bonds or Ginnie Mae funds, which have a higher rate of return, but are as liquid as CDs. Liquid CDs are another good option so that you can switch your money when rates do go back up. Financial advisors even suggest that consumers use their money to pay off high interest debt such as consumer credit cards instead. For those who want to keep the money in the bank, then take a trip down to the bank to have a face-to-face meeting with one of the banks investment advisors. Let them know that you want to earn a higher interest rate on your money and share with them some of the other options youve found. They tend to work a bit harder to keep your money when faced with the fact that they might lose it.

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