To some extent, the internet has made it lot easier to compare CD rates. After all, CD rates can be found online, and updated daily. With every date you need at your convenience, it is a relatively simple matter to choose the highest CD rates. Hence, for you to choose the best CD rates, there some basic things you should know when you make your selection of the better CDs.

First of all, you will need to understand that a CD is a certificate of deposit, which amounts to an agreement between an investor and a financial institution in which the amount of money you deposit, the amount of time you will leave it with the institution and the interest rate the institution pays you are all specified.

You have to understand that your deposit is a general obligation of the financial institution, which means that it depends on the overall ability of that institution to pay you as promised. CDs are often guaranteed by federal insurance, this is indeed a factor that you must confirm in writing before making your choice. Your own part is to leave the deposit with the institution for the agreed period of time or else pay a fee for early withdrawal.

As a result of the sanction that comes with early withdrawal, timing is a very important factor when choosing a CD. Be sure not to lock up your money for any longer than you can afford to go without it. But since the long term CDs tend to have higher interest rates, you should go for the longest CD you can, depending when you will be in need of the money. The point that longer –term CDs have higher rates is important to remember when you compare CD rates. You must choose according to the time frame that best suits you.

Also when comparing CD rates, you should bear in mind the integrity of the granting institution. Given the current global financial meltdown and other unfavorable circumstances that do lead to bank failures, this has made it a plausible factor when you compare CD rates.  You have to do an internet search for negative articles, and if the institution you are about investing in is a public company, check to see if its stock has had an unusual dive.

On a serious note, you will have to make sure that the company has an insurance backing. Bank CDs are insured by the FDIC in the U.S for up to $250,000, unless you have total deposits of greater than that amount with the same bank. Credit union CDs may or may not have federal backing, and if so, it may be in smaller amount.

Another issue to look at while comparing CD rates is call features. Some CDs have what are known as call features, which allow the issuer to terminate the CD early at its discretion. This means that if interest rates fall, you may lose the higher rate you thought you had locked in with the CD. If possible therefore, avoid call features.

In all, the best approach to compare CD rates is to first make sure the CDs have the same time frame, call features, and insurance backing, and only then choose the highest rate.