One myth about saving money is that our choices are limited between a low-yield savings account that hardly makes a difference in our finances, or, an unattainable investment account requiring tens, if not hundreds of thousand of dollars to open. Luckily, for the borrower who wants a more dynamic savings option, a certificate of deposit, or CD, may be the right choice.
A CD is a savings account that promises a higher interest rate if you keep your funds on deposit (without any withdrawals) for an agreed-upon period of time — anywhere from six months to five years. Once the CD matures, your money, accrued with interest, becomes liquid.
Straightforward and simple, CDs are more than a basic savings account. You’ll still want to compare them to other savings accounts to see if a CD is right for you. They can be opened to save for retirement, be used as a passive form of income, and be the bridge towards greater forms of investing. Should you open one from a bank, a credit union, or online? Your options and interest rates may differ depending on where you look.
Check out some of the articles below to see how a CD can benefit you and your money.