What is Certificate of Deposit (CD)?

With many Americans spending more than they did just a year or two ago, the thought of saving money isn’t always at the forefront. when Inflation And Increase in interest rates Like things hurt Grocery shopping And Purchase at homeThey have led to unique opportunities for those who want to save extra money.

For example, High Yield Savings Account Currently offering interest rates many times higher than the interest rates attached to traditional accounts. Certificate of Deposit, or CDs, are offering favorable terms and incentives for those looking to earn more interest. To get the most out of a CD it helps to first understand how it works as well as how you can benefit from opening one.

You can easily check today’s CD interest rates here to see if it makes sense for you, or use the table below to explore some local options.

What is Certificate of Deposit (CD)?

A CD is a type of account offered by banks or some credit unions in which account holders deposit their money for a specified period of time and earn interest. This interest is typically higher than the 0.33% many people get with a regular savings account, though you’ll need to keep the money in the CD for the full agreed-upon term to fully earn it.

CDs are popular for their terms (as long as you agree to keep your money in the account untouched). For many, it acts like forced savings that won’t be subject to constant withdrawals or charges.

Terms vary significantly; This can be months or years, depending on what you chose when you opened the account. At the end of the term, the account holder can withdraw their money (and the interest earned) from the CD. They can renew it or open a new one with different terms.

If it sounds convenient to you, start checking today’s CD interest rates and options to see how much interest you can get.

Who benefits from opening the CD?

Anyone who wants to earn more interest than they’re currently earning with a regular savings account — and temporarily put away a portion of their savings — would probably benefit from opening a CD. Interest rates for CDs are currently around 4% to 5%. Some banks and credit unions may offer even higher rates so shop around before you sign on the dotted line.

For those who prefer to visualize their earnings, consider $5,000 deposited into a regular savings account with an annual percentage rate (APR) of 0.33%. After 12 months that account will earn $16.50. But if it were left in a CD for the same period, the $5,000 would become $5,225 (at 4.5% interest). That’s a lot of money for very little work for the account holder.

CDs are also good for those who have trouble accumulating savings. It can be tempting to keep swiping a debit card only to pay yourself back with the next direct deposit. You won’t be saving this often and will notice your account dwindling over time. But by putting that money in a CD, you can rest easy knowing it’s safe (and earning interest).

How else would your money be protected on CDs? There are usually little to no maintenance fees. Not only does this mean that you will be able to keep all the interest you earn, but it also means that the capital you have accumulated will remain untouched. Compare that to the typical fees you’d typically see deducted from your other accounts, and you’ll quickly see the benefits of putting that money into a CD.

Explore your local CD options using the table below and start making more money now

Bottom line

CDs offer account holders a unique way to protect their money and earn more interest by accumulating those funds in an account for a specified period of time. The CD cannot be accessed during this period (which can last months or years), but the account will typically earn significantly more interest than if it were left in a regular savings account. It is an attractive option for those who want to start making more money and who want a safe way to protect what they already have.