Safety

• When you invest your money in a CD, you get a guarantee that you will get back the original money you put in, plus any interest that accrues during your investment period. As such, you can use a CD to protect the funds you can't afford to lose, for example retirement savings. Additionally, the Federal Deposit Insurance Corporation (FDIC) insures Principal Bank's CDs to a maximum of $250,000. This means that even if Principal Bank fails, you will get back up to $250,000 of the money you invested in CDs.
  
  

Interest Rates

• Principal Bank CDs carry competitive interest rates compared to similarly safe investments. These interest rates are higher than those on regular savings accounts or money market accounts. As of June 2011, these interest rates range from 0.25 to 2.25 percent per year. Principal Bank also offers the Change A Rate CD, which allows you to increase the interest rate once during the investment term. This way, you can take advantage of any interest rate increases even while your money is still in the CD.
  
  

Monthly Compounding

• Principal Bank applies monthly compounding to its CDs to allow your money to grow faster. For example, assume your yearly interest rate is 2.4 percent. If you invest $100 without any compounding, you will get $2.40 in interest (from 2.4% X $100) at the end of every year. With monthly compounding, you will earn 0.2 percent (from 2.4% / 12) on your investment each month. You will earn $0.20 the first month, then 0.20 percent of $100.20 the next month and so on. At the end of the first year, you will have earned $102.43.
  
  

Choices

• Principal Bank has a range of CD types from which you can choose. You have the ability to match the CD term to your financial needs. These CDs have investment terms that range from three months to 72 months. With a low minimum deposit amount of $5,000, you don't have to invest too much money in a single CD. You can also set up a CD ladder, which involves rolling your funds into another CD once a CD expires. This gives you flexibility to withdraw the money before reinvesting the funds.