The Benefits of Opening a Certificate of Deposit
A certificate of deposit (CD), offered by credit unions, traditional banks, and online banks is one of the safest and most reliable saving investments you can. This account allows savers to deposit a specific amount of money, which earns interest over a set term. Once the term is up, the maturity date is reached, and the saver can withdraw their money or invest into a new account. The money withdrawn would be the initial investment plus the compounded interest. So, if you are looking to earn more on your money compared to a traditional savings account a CD might be a great option for you.
Flexible Term Options
With a CD, having the ability to choose how long your money is locked away with an institution is a huge advantage, flexible term options allow you to be in control of your money. Depending on where you open your account, you will see varying terms, so you may see terms as short as 3 months to 10 years. Each institution has different specials so be sure to shop around and find what term is best for you.
Invest Big or Small
The choice is yours. Whether you want to lock away $500 or $2,500 is your decision. There are a range of options for the minimum amount you must invest to lock in your CD. An example of a CD you may see is a 12-month term with a dividend rate of 4.75% compounded monthly with a minimum of $2,500 or a 5-month term with a dividend rate of 4.93% compounded monthly for a minimum deposit of $500. As you can see the first term is 12 months long and the second is 5 months long. Make sure to choose a CD that fits within your comfort zone of term and budget.
Fixed Interest Rates
When opening a CD, the interest rates paired to your certificate term are fixed, meaning the interest rate will not change during the term. However, there are Rate Bump CDs that allow a one-time rate to increase to the current advertised rate during the certificate term. A fixed-rate allows you to predict your return; you will invest a specified amount at a locked rate for a specified period (term).
Wanting to open your certificate of deposit, Gulf Winds is here to help.