Personal

Certificates of deposit: No volatility, plenty of convenience, plus a worry-free return

You need a safe place to put your money, with a reasonable return. A CD could be the right fit.

Helen Socha, managing director, Head of US Retail Banking Mar. 22, 2022 3-minute read

In an increasingly unpredictable world, you need a safe place to put your money, while earning a reasonable return. For many, the right fit might be a certificate of deposit (CD).

Why choose a CD?

A CD offers many benefits:

Earn a fixed rate of interest
Save with no annual or custodial fees
Choose from term lengths between 30 days and five years
Withdraw all funds or renew at maturity
Reduce volatility and risk found in other types of investments

When it comes to saving, one size does not fit all. Equity market investments and mutual funds are great for long-run savers and overall portfolio management, but they can be volatile. Fixed-income instruments, such as corporate and municipal bonds, can be part of a well-rounded investment program. However, they require you to lock up your money for long periods.

CDs are short- and intermediate-term instruments that offer better returns than simply leaving your money in a low- or no-interest checking account. Plus, they’re FDIC insured up to the stated limits Opens in a new window..

Savings “sweet spot”

Savings accounts may earn little to no return. Traditional investments, like stocks, bonds and mutual funds, are not FDIC insured. For savers with relatively short time horizons, a CD can fit a “sweet spot” between the two.

Like savings accounts, CDs earn interest. They’re also easy to open, with relatively low minimums of $1,000 to get started. So what’s the difference between CDs and savings accounts?

CDs frequently offer higher rates of return than most savings accounts for a predetermined length of time — or “term” — between 30 days and five years.
You may pay a penalty if you take an early withdrawal from a CD.
Savings accounts offer lower rates of returns than CDs, are 100% liquid and let you withdraw funds without penalty.

CDs also match some of the benefits of traditional investments. You can withdraw or reinvest the interest earned in the CD, similar to dividends from a stock or bond. You can also withdraw or reinvest all the money in a CD when it matures at the end of its term.

Unlike traditional investments, CDs continue to earn a steady rate no matter how markets perform. This eliminates the risk of losing money when volatility strikes. Savers also pay no annual fees or custodial fees. CDs may be an ideal option for reducing risk, lowering fees and creating income on your savings.

Ready to start saving?

For current CD rates, visit us. Or you can call 877-448-6500 Opens your phone app..