Are CDs Worth It?

Over the next four Money Minute Mondays, we’re making certificates simple. We’ll help you understand how they work, when they make sense, and how they could help you get more from the money you’ve worked hard to save.

You’ve worked hard to build your savings. Could some of that money be working harder for you?

A certificate of deposit (CD), often called a certificate at a credit union, is a simple way to earn a guaranteed interest rate on money you don’t need right away.

Here’s how it works: You deposit money into a certificate for a specific amount of time—called a term. In return, you receive a fixed interest rate for that term. When the certificate reaches its maturity date, your money and the interest it earned become available.

Why consider a certificate?

A certificate may be worth considering if you:

• Want predictable growth. Your rate is locked in, so you know what your savings will earn.
• Have money you won’t need right away. Certificates can be useful for savings beyond your everyday and emergency needs.
• Are saving for a future goal. A certificate can help you set money aside for a vehicle, vacation, home project, tuition or another planned expense.
• Want to avoid market risk. Certificates at federally insured credit unions are insured by the NCUA up to applicable limits.

There is a trade-off: access. Certificates are designed to remain untouched until maturity, and withdrawing money early may result in a penalty.

Your Money Minute

A certificate isn’t about getting rich quickly. It’s about putting money you don’t need today to work toward something you want tomorrow.

Before opening one, ask yourself one simple question:

When will I need this money?

If you have savings you can leave untouched for a while, a certificate could be a simple way to help you accomplish your next great thing.

Ready to see what your savings could earn?
See Downriver CU’s Current Certificate Rates →

Next Money Minute Monday: Savings Account or Certificate? A simple way to decide where your money belongs.

Click here to watch the video or read the full source article for this series.