6. Callable CD

You have to be really careful about the economic conditions before even considering this type of CD, as it comes with significant risk. You could earn higher interest since banks will pay higher APYs if you’re willing to go this route, but you never know when rates might fall. If and when they do, you best believe your bank will call back the CD before it matures in order to reissue it to you at a lower rate.

Let’s say you’ve decided to go for a five year CD, the APY is at 2%. Now let’s assume that six months later the rate drops by 1%, so the bank has to lower their rates too. You’ll essentially be stuck there afterward, even if you’ll receive your full principal and interest earned.