FINANCIAL HOUSEKEEPING | Learn to build a “CD ladder”
With interest rates having been on the rise, savers and income investors are faced with some interesting choices when it comes to certificates of deposit. While studies show that investors aren’t getting a big premium to lock their money in place for four or five years, many people will find that the long-term CD yields are attractive enough that they might want to lock them in place in case there’s a rate reversal ahead.
With that in mind, the CD laddering calculator at helps savers divide their money between different certificates of deposit to improve long-term returns. The calculator provides a specific game plan for splitting the money into different time intervals.
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SHORT COURSE | Subprime mortgages
A term that has been all over the news recently – because of troubles encountered by some lenders – subprime mortgages technically represent loans made to borrowers with credit scores under 620.
Credit scores range from roughly 300 to 900, with most consumers placing somewhere between 600 and 700. Someone who routinely makes late payments or falls behind on debts will see their credit score drop, to the point where they are considered a poor credit risk.
The lender most likely won’t use the term “subprime loan” to describe the deal they offer that consumer, but they will be facing higher rates than on equivalent prime loans as well as additional penalties and fees than they would get if their credit score was higher.
