March 27, 2020 · Budget, Investment, Retirement
Do you have any CDs to go along with your savings and checking accounts? If not, then you should consider finding out more about them. For financial institutions, CDs are about Certificates of Deposit, and they are a pretty easy way of letting your money grow more than it might in a checking or savings account.
Let's take a look at CDs and see if they might make sense for you, either now or in the future.
A personal Certificate of Deposit (CD) allows you to set aside money and have it grow at a higher interest rate than a standard savings account, and the interest rate you receive will be earned daily and guaranteed. When you put money into a certificate of deposit, it will be kept there for a specified period of time—an exact number of months or years. When that time period is complete, the CD is considered to be matured. After the certificate of deposit has matured, the money can then be used or you can renew it so it stays in the CD for another timed period. If you want to access the funds after maturity (rather than a renewal), they may be transferred to your Checking, Savings, or Money Market Account.
At Delta Community, you may choose 6, 12, 24, 36 or 60-month terms for your CD. Pick your term based on when you will need the money and how much you want the starting amount to grow. What if you need to take the money out of the CD before the maturity is reached? Well, there is an early withdrawal financial penalty for closing the CD before its term is up; the penalty varies based on the term length of the CD.
If you have more money in a savings or checking account than you are likely to need for 6 to 60-months, then it makes good financial sense to give it the opportunity to grow larger. A CD has several advantages to consider:
As mentioned above, high-yield CD interest rates are usually higher than the rates for a savings account, and those rates get higher as the term of the CD increases, so that a 60-month term CD will generally have a higher rate than a 6-month CD.
CDs are considered to be a dependable way to grow money since the interest rates are guaranteed; they don't go up or down.
Because the interest rate is fixed, you’ll be aware of exactly how much interest you're earning, and as it accumulates (known as compound interest), you can calculate how much your CD will be worth at the end of the term.
For some people, a CD is an easier way to set aside money because it is not immediately available and they know they can't spend it right away, consequently they don't disturb it and let it reach full maturity.
If you'd like to know more, then please talk to us about whether a CD is appropriate for your savings goals. You can call us at any time via our toll-free number at 800-544-3328 or locally at 404-715-4725, or visit us at a branch to discuss your financial needs. Our Locations page has branch office addresses and hours of operation.