Why You Should Save Money in a Certificate of Deposit (CD)

Why You Should Save Money in a Certificate of Deposit (CD)

Wondering if you should put your hard-earned money into a certificate of deposit (CD)? We’ll explain five reasons CDs are a smart way to save for short- and long-term needs and wants.

Read on and learn how saving your money in a CD can help guide you toward your financial goals confidently.

5 Reasons Why You Should Put Money in a CD


CDs offer flexible time frames (terms)

Whether you have short-term aspirations like saving for a vacation or are working toward larger financial milestones like retirement, CDs offer a versatile solution for nearly any goal.

When you look at CD accounts, you’ll notice an array of time frames called terms. The term is the amount of time you agree to leave your money in the account without making any withdrawals. Your CD account matures, earning interest over time, and upon maturity, you can withdraw your balance and the interest accrued.

Account options feature a range of terms to suit a variety of timelines, with some as short as three to six months and longer terms lasting between one and five years. Consider aligning your CD terms with your savings goals so that your account and its earnings are available when you need them. For example, if you plan to buy a house in the next five years, you might open a CD with a term between three and five years.

CDs have higher interest rates

Compared to savings, checking, and money market accounts, CDs generally offer higher interest rates. This is possible because, as mentioned above, when you open your CD, you agree to leave your money with the financial institution for a set period of time. As a result, the bank can offer you a higher, more competitive rate.

Keep in mind that CDs with longer terms tend to offer higher interest rates, an added incentive to leave your funds untouched for the agreed-upon period. Consider your financial goals and their timelines, as well as the account’s terms and rates, to select a CD that maximizes your earnings potential.

CDs are federally insured

When opening a CD or any deposit account at a bank, it’s smart to make sure the institution is Member FDIC. This means the bank belongs to the Federal Deposit Insurance Corporation, an independent government agency that protects deposits up to $250,000 per depositor, per insured bank.

At Rollstone Bank & Trust, we are not only Member FDIC but also Member DIF (Depositors Insurance Fund). DIF picks up where FDIC coverage leaves off and insures every dollar over $250,000 – up to your total account balance – for 100% deposit protection. There are no requirements for FDIC or DIF coverage; both are standard features of our personal banking accounts, including CDs, savings, checking, and more, giving you total peace of mind.

CDs deliver guaranteed returns

You can enjoy reliable growth through guaranteed returns when you save with a CD. The bank commits to returning your initial deposit along with the interest earned during the specified term. This predictable growth allows you to plan ahead, already knowing what you will get in return, which can be particularly helpful for financial forecasting.

Guaranteed returns are always an appealing feature of a savings account, and CDs can be especially attractive when saving for retirement. Rollstone Bank and Trust offers CD individual retirement accounts (CD IRAs) that allow you to save for retirement with all the benefits of a traditional CD and an added tax break that may reduce your taxable income. Contact us to learn more about CD IRAs.

While CDs typically offer guaranteed high-yield returns, it is important to note that withdrawing funds before the agreed-upon term, also known as maturity, may result in penalties that can reduce your earnings.

CDs are easy to open 

Starting your savings journey with a CD is simple, and opening a CD doesn’t require a lot of money or time. In fact, at Rollstone Bank and Trust, you can start earning interest on a CD with as little as $500.

With terms from three months to five years, we provide an array of CD accounts and some of the best CD rates in Massachusetts. View our rates, and when you’re ready to take a confident step toward securing your financial future, stop by one of our conveniently located branches to open an account.

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