No one can argue that we are living in extremely unpredictable times, and with economic uncertainty comes the need for reassurance that your money is safe.
For many, parking their money in a certificate of deposit (CD) may provide the feeling of security they seek while their money earns interest at a higher rate than a traditional savings account.
What exactly is a certificate of deposit? A certificate of deposit, commonly called a CD, is a special savings account you can open at most banks and credit unions. But unlike a regular savings account, CDs require you to lock your funds away for a specific period of time until a maturity date. In return, you’ll get a higher interest rate.
This unique feature makes CDs perfect for a long-term savings goal. You can get better interest rates than a savings account would give you.
If you have funds that you want to keep safe for anywhere from a few months to a few years, a CD could be a good way for you to save. There is a penalty for withdrawing your funds early, which makes it easier to stow that money away and forget about it.
CD interest rates generally go up as the term increases. So, you’ll get a lower interest rate with most three-month CDs than with 12-month CDs. Common time periods for CDs are three, six, 12, 24 or 60 months.
CD interest rates are typically lower than investment returns from the stock market, but most CDs are fixed-rate and federally insured. That means you can rest assured you won’t lose money if the stock market declines. That’s why a certificate of deposit is a great tool for storing money for a down payment or another long-term financial goal or purchase!
At Telhio, we offer CD terms from three months to five years, and the interest rates are commensurate with the length of the term. In a CD, your deposit is secure and insured, and interest is compounded and paid quarterly. So, if you are certain that you won’t need some of your money for a period of time, consider a CD and rest assured your money will be safe while growing for you!
This is a multi-part sponsored series presented with paid support by Telhio Credit Union.
Telhio Credit Union is open to anyone who lives, works, worships or goes to school in Central and Southwestern Ohio. Founded in 1934, originally as the credit union for the Columbus Telephone Co., Telhio is a not-for-profit financial cooperative where its members are also its owners. Driven by its philosophy that members come first, Telhio is committed to the highest standards of responsibility and conduct. Telhio offers a variety of innovative programs, services and products to support its members’ financial needs. Telhio offers nine branching offices throughout Central and Southwestern Ohio and nearly 4,000 shared branching locations nationwide. Federally insured by NCUA. Equal Housing Lender. NMLS #251831