When looking for the best CD rates before investing your money, some people try to “time the market,” meaning that they try to determine if the rates are going to increase or decrease before they tie their money up in a CD account. But timing the market is hardly ever a good idea and it rarely results in higher returns on your investment.

One investor recently asked a question about timing the market to get the most for her money. Her and her husband put some money in a money market fund which was only earning one percent interest for them. They had other money for emergencies but they wanted to reinvest their money market money into an account that would give them more.

She was considering putting their money into a 3-year CD account which would earn them 2.7 percent interest. Advisors had told her to split her money up into several CD accounts so all of their money was not tied up in one account in case they need it later. She had the idea of purchasing several CDs at the current rates and then pulling the money out, paying the withdrawal penalty and then putting that money in CD accounts if CD rates go up in the next few months. Her question was this: Would it be a smart financial move to do this?

What she was talking about was CD laddering. When you have you money invested in a CD laddering strategy, it is important to leave the money where it is. The CD laddering strategy is for those who can let their money sit until each CD matures and then reinvest that money into longer term CD accounts upon maturity. So basically, the quick answer to her question is this: Put together a CD laddering strategy in which she could invest some of the money into a 6-month CD, a 1-year CD and so on. Then, as CD rates increase over time (if they do), she can reinvest the money from the maturing CDs into the CD accounts with higher rates.

CD laddering helps keep investors from being locked into a low rate for too long. As a result, if CD rates increase, the investor has the opportunity to reinvest the money at the higher rates as long as those rates stay that high as their CDs mature. It’s a great strategy for those who have the money to invest in several CDs at the same time.

Certificates of deposit are great ways to invest your money to have it working for you. However, it only works if you don’t need to touch that money for the life of the CD. CD rates are at decent levels right now, but getting higher yields is always the goal of many investors.

For those who are looking for larger yields without risking too much, a callable CD may be the ideal approach. Callable CDs have better returns than traditional CD accounts and they are even insured by the FDIC. But while callable CDs seem like a great deal, there is some fine print that you should know before putting all of your money into one.

One of the main differences between a callable CD and a traditional CD is that the issuer of a callable CD can “call” your CD from you before it fully matures. This means that the bank can end your CD after a certain amount of time and return your money with interest. For instance, if you have a callable CD with a call date of one year, the issuing bank will evaluate your CD account each year and determine if it wants to keep your money in the account or close out the account.

The call date on a callable CD is much different than the maturity date. Maturity date refers to the actual length of the CD. You can have a maturity rate of one year, five years, 10 years and even longer. The call date will always be shorter than the maturity date.

But why would a bank want to “call” your CD and return your money with interest? Since interest rates change from time to time, the bank will always want to make sure it is getting the best deal. If the interest rates decline significantly, the bank can borrow money at lower rates than what your callable CD is earning. As a result, the bank will see that it is in their best interest to stop paying the current interest rate on your CD and close it out. You would then have to find another way to invest the money.

While callable CDs offer higher yields, they tend to have a great deal of uncertainty attached to them. There is nothing wrong with investing in a callable CD if you are comfortable with it getting closed out before maturity. But knowing the difference between these two types of CD will help you make an informed decision about the best investment opportunities for your situation.