Beginner Investing/cd;s

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Expert: - 2/7/2007


Question
If I buy a six month cd at 5.50% what will the bank pay me at the end of six months.

Answer
The answer is reliant upon the amount of the CD that you purchase and some of the other terms of the CD. There are three types of CD's, these types are check, transfer, or capitalized. These refer to the way that the payment is made to you. We will assume that yours is a capitalized CD since you ask "at the the end of six months." A capitalized CD is one where the bank changes your interest into principal over the life of the CD and the interest is then charged on the new principal amount. Therefore, lets say you have a $10thousand CD, capitalized payments, with an interest rate of 5.5% compounded daily. Over 6 months this would translate into a 5.654% annual percentage yield giving you $10,279 at the end of 6 months.  

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Robert Hanzel

Expertise

I can answer questions regarding most areas of consumer and commercial finance. I have extensive experience regarding various types of loans (commercial, consumer, USDA, SBA 504, SBA 7A, foreign), many investment vehicles, credit, economics, and banking. I am not an expert regarding tax structures and other tax issues and thus would not recommend asking tax related questions.

Experience

Over 11 years Financial, Investigative, and Legal experience including loan review, due diligence, financial analysis, collections, and risk management. I have managed Credit Administration, Loan Administration, Credit Analysis, Credit Review, Liquidation Departments, Collections, and workouts

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Both the Risk Management Association and the Bank Administration Institute.

Education/Credentials
I have obtained both my Credit Risk Certification from the Risk Management Association and a Loan Review Certification from the Bank Administration Institute.

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