A CDT (Term Certificate of Deposit)is a financial product offered by banks and financial institutions, which works as a low risk investment, where a person deposits an amount of money for a fixed period, which can range from 30 days to a year or longer.
In exchange, the person receives a previously agreed upon fixed interest rate, which represents the profit they will obtain on their investment at the end of the term.
Some of the main features of CDTs:
- Fixed term: Your money is frozen for the time agreed in the certificate. You cannot withdraw it before expiration without penalties.
- Fixed interest rate: You know in advance the profitability you will obtain on your investment, which allows you to plan your finances with greater security.
- Guaranteed profitability: The bank guarantees payment of the agreed interest rate at the end of the term.
- Security: CDTs are backed by the Financial Institutions Guarantee Fund (Fogafín), which protects your investment up to a certain amount.
- Liquidity at maturity: At the end of the CDT term, you can freely dispose of the money invested, including the profits generated.
Recommendations for choosing a CDT
Define amount and term: Before choosing a CDT, it is important that you define how much money you want to deposit and for how long.
Learn about interest rates: Investigate the current interest rates in different financial institutions. Some CDTs offer variable rates, so compare those offered by different financial institutions before deciding.
Consider additional conditions: Each financial institution may offer additional benefits and conditions, such as the possibility of making early withdrawals or the option to automatically renew the CDT upon maturity.
Investigate fees: If you are interested in knowing which bank charges the least fees and offers the best returns, I would recommend doing your research and comparing the available options.
You may be interested
3 banks will pay the highest CDT in May 2024
According to the specialized media Rankia, best CDTs to invest in May 2024 at 90 days (Annual effective rates based on of the Financial Superintendency seen on January), the ranking of the best banks is as follows:
- Pichincha Bank 12%
- Banco Itaú 11.15%
- Bancoomeva 11.10%
More options to invest (90 days):
- Bancoomeva: 11.10%
- Pichincha Bank: 12.00%
- Bank of Bogotá: 10.60%
- Itaú: 11.15%
- Colpatria Scotiabank: 9.40%
- Davivienda: 10.75%
- BBVA: 10.65%
- Caja Social Bank: 8.10%
- AV Villas: 4.95%
Rates of the best 180-day CDTs
Investing for a period of six months can also be a good option, according to Rankia the best are;
- Banco Pichincha 12.40%
- Bancoomeva 10.90%
- Banco Itaú 10.80%
If you have extra money and don’t know what to do with itit may be that you received an inheritance, sold a property, receive your bonus, or have some other unexpected income, it may be a good option to invest it in a CDT.
Please note that this is a low risk investment and The higher the amount you invest, the higher the profits will also be.although you can invest from 500 thousand pesos.
Likewise, if you already own a CDT, there is the possibility of repaying that money once you meet the deadline agreed with the financial institution. Profits can be reinvested and accumulate more and more and if you are looking for exponential growth, it could be useful to give your money monthly movement.
The Forbes portal recommends looking for the terms that best suit you, “from 30 to 360 days are available. Use the formulas offered by CDT simulation tools, set a goal and continually reinvest to keep up with your capital. The recommendation of expert advisors is to constantly review the information provided by banking entities to calculate which options are the most favorable according to the needs of each investor.”
Another recommendation is to take a close look at the interest rates in effect at the time you are considering investing. CDT rates may vary over time and depending on economic conditions, so It is important to compare the rates offered by different financial institutions before making a decision.
It doesn’t hurt to research expectations for how interest rates will change in the future. If interest rates are expected to riseit could be beneficial to invest in a longer-term CDT to lock in higher rates.
Thus, investing in CDT is a smart option if you have a defined long-term goal, it may be the purchase of a home, your studio or home.but CDTs pay more dividends in the long term than in the short term.
If you do not have large amounts, and you are eager to achieve results, perhaps investing in CDT is not the best option. If you need constant access to your money and are concerned about liquidity, it is best not to open a CDT.
