When you put money into a bank certificate of deposit (CD), you want to get the best possible return. There are several factors to take into consideration. For example, if you will need the money in the near future, you will have to settle for a lower interest rate. Once you determine how long you can afford to keep your money tied up in a CD, you will need to compare other features among different CDs with the same annual return, such the annual percentage yield (APY).

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     Determine how long you can leave your money in the CD. Banks charge a penalty for redeeming a CD before it matures, so be sure that you will not need your money sooner. CDs are usually offered for terms of three months, six months, one year and five years. Short-term CDs pay a much lower interest rate than long-term CDs. As of May 8, 2010, the national average yield for a six-month CD was 0.91 percent. The average for a five-year CD was 2.88 percent.

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When you take out an amortizing loan, your monthly payment on the loan remains the same over the life of the loan. However, the portion of the loan that pays off accrued interest and the portion that pays down your principal change over the life of the loan. At the start, more of your payment will go toward interest, but as the amount you owe decreases, so will the amount of interest paid. You must recalculate the principal and interest each time you make a payment.

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     Divide the annual interest rate by the number of payments you make during the year to find the periodic interest rate. For example, if you make monthly payments and your loan has an annual interest rate of 10.2 percent, you divide 0.102 by 12 to get 0.0085 as your monthly interest rate.

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