Why Invest in a CD?

Posted by Jen Laud on Oct 26, 2016 8:00:00 AM

After such a long time with record-low interest rates, we're starting to see savings rates rise again. For people of all ages who are interesting in weighing their options, taking another look at CDs is worth it.


 What are some of the main reasons to invest in a CD?

As we've already mentioned, we're starting to see higher savings rates. CDs are issued with a maturity, so your funds are locked-in for a set period of time. because of this, Credit Unions and Banks will pay you more for a CD than for a savings account. 

Depending on when you need access to your savings, you have flexible terms and minimum deposits available. At FFCU, you can select a term as short as 12 months or as long as 48 months. And minimum deposits are either $1,000 or $5,000. The more you invest and the longer the term you chose, the higher the yield you will be paid.  

One of the major reasons CDs are popular is for their safety. Banks and Credit Unions that are federally insured are backed by the government. First Financial Credit Union, for instance, is insured by the National Credit Union Administration (NCUA), which federally insures savings to at least $250,000. 

Unlike the stock market or even a savings account, you are guaranteed to earn a predictable return. When you open a CD, you know what rate and what term you're signing up for. Even if rates fall, your rate for that term will not be impacted.


What should you consider when getting ready to open a CD?

You'll want to consider how much cash you need available. There are penalties for withdrawing funds from a certificate before its maturity date, so you don't want to close the account early if you don't have to. 

However, larger dollar amounts at longer terms are typically given higher rates. Think about what you would do if you had an unexpected expense come up to help you determine how much money you can lock in to your CD.


Have additional questions or want to talk to someone about opening a CD? Let us know you'd like a member of our team to reach out to you and we'll be happy to help you feel confident in your financial decisions.

Topics: Saving & Budgeting


Our blog features articles for our members, the community and anyone looking to gain information that can help them achieve financial success.

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