Why You Should Consider Opening a CD
Published January 29, 2024
Are you looking for a safe and low-risk investment option to grow your savings? If so, Certificate of Deposits (CDs) are a great option. CDs are a popular financial product that can offer several advantages to individuals looking to earn a steady return on their money while keeping their funds protected. In this blog post, we'll explore reasons to consider opening a CD.
Safety and Security
One of the primary reasons to open a CD is the safety and security it provides for your hard-earned money. CDs are typically offered by banks and credit unions and are insured by the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Administration (NCUA) up to certain limits. This means that even in the unlikely event of a bank failure, your principal amount, including earned interest, is guaranteed.
Predictable and Guaranteed Returns
CDs offer a fixed interest rate for a specified term, which can range from a few months to several years. This predictability allows you to plan your finances with certainty, knowing exactly how much you'll earn on your investment. Unlike the stock market where returns can be volatile, CDs offer a stable and guaranteed return on your investment.
Diversification of Your Portfolio
While riskier investments like stocks and real estate can yield higher returns, they also come with higher levels of risk. Adding CDs to your investment portfolio can provide diversification, balancing the overall risk of your investments. By allocating a portion of your funds to CDs, you can protect a portion of your assets from market fluctuations.
Liquidity Options
While CDs are designed for a specific term, they do offer some flexibility. Many banks offer CDs with various terms, allowing you to choose one that aligns with your financial goals. Additionally, some CDs offer penalty-free withdrawals before maturity, although this may result in a lower interest rate. This means you can access your funds in case of emergencies, albeit with some restrictions.
Higher Interest Rates than Regular Savings Accounts
Compared to traditional savings accounts, CDs often offer higher interest rates. This means your money can grow at a faster pace within the CD, helping you reach your savings goals more efficiently. It's important to shop around and compare rates at different banks to find the best CD for your needs.
Discourages Impulsive Spending
By locking your money into a CD with a fixed term, you're less likely to dip into your savings for unnecessary expenses. This disciplined approach can help you stay on track with your financial goals and avoid impulsive spending.
Suitable for Short and Long-Term Goals
Whether you're saving for a short-term goal like a vacation or a long-term goal like retirement, CDs can be customized to meet your needs. Short-term CDs can provide liquidity, while long-term CDs can offer higher interest rates for your retirement nest egg.
Neighborhood Credit Union CDs
| Account Type | Summary | Minimum Opening Deposit | Interest Rate / APY* | Flexible |
|---|---|---|---|---|
| Inflate My Rate CD |
A 25-month CD with one opportunity during the term to request a rate match to the 18-month CD rate.
|
$2,500 | 4.40% / 4.50% |
No additional deposits allowed
|
| Online Savings CD |
Must be opened online, must be 18 years of age or older, short-term of 17 months
|
$1,500 | 4.12% / 4.25% | Additional $25 minimum deposits allowed |
| Standard Certificate |
Terms from 91 days to 60 months, competitive rates, low risk
|
$2,500 |
Up to 3.68% / Up to 5.00 %
|
No additional deposits allowed |
|
Save for retirement with a competitive rate, yearly IRS contribution limits, terms from 12 months to 60 months.
|
$2,500 | Up to 3.68% / Up to 4.50 % | Additional $25 minimum deposits allowed | |
| FlexPlus |
A flexible short-term CD for 12 months to grow your money fast
|
$500 | 3.92% / 4.00% | Additional $25 minimum deposits allowed |
Opening a CD can be a wise financial move for those seeking a safe and secure way to grow their savings. With guaranteed returns, predictable interest rates, and the flexibility to choose terms that suit your goals, CDs at Neighborhood Credit Union allow you to take control of your finances.
Skyler has been a Marketing Content Specialist at Neighborhood Credit Union since 2019.
Who We Are
As an active part of the community for 93 years, Neighborhood Credit Union is a not-for-profit financial organization serving the state of Texas with branch locations in Collin, Dallas, Denton, Ellis, and Tarrant counties. With assets topping $1 billion, Neighborhood Credit Union has a continuously growing membership of over 60,000. For more information, call (214) 748-9393 or visit our homepage.