THE SCENARIO
I recently saw a billboard advertising a Certificate of Deposit (CD) at a local bank at an 'amazing' 1.75% rate. That got me curious as to what the best CD rate I could possibly get might be, so
I did some looking and found that if I wanted to tie my money up for 5 years, I could get 2.75%*. I suspect that a 2.75% return isn't going to be my path to fortune, but let's do the math and check it out.
One thing to know about CDs is that when you put your money in, you can't take it back out (without a penalty) for the length of the term. Basically, in return for giving you a higher interest rate than you'd get on a normal savings account, the bank gets to keep your money for longer, knowing you won't ask for it back for the duration.
The question: ...
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