5 Benefits of a Certificate of Deposit
Certificates of deposit (CDs) are just one of many options available for saving money. However, CDs offer benefits you may not find with other savings solutions. Here are five reasons CDs can be a good addition to your financial strategy.
- Safety. Along with savings accounts, CDs are one of the safest places to keep your money as long as you purchase your CD through an FDIC-insured bank.
- Take advantage of special rate offers. Limited time special CD rate offers may become available. These CDs allow you to earn an even higher interest rate than a what is typically offered at the time. Sign up here to be notified of Capitol Federal’s special rates.
- Guaranteed Returns. When you open a CD with fixed rates and terms, you know exactly how much interest you’ll be earning during the time frame. This can make it easier to plan for future goals since you can more accurately estimate how your money will grow in CDs.
- Maturity dates can help you avoid temptation. Many CDs come with fixed terms which means you must leave the money you deposited for a set length of time or incur early withdrawal penalties. This can help you resist the temptation to take money out of the account before it has matured. If you’re concerned about not having access to your money, a CD laddering strategy allows you to set up several CDs with different maturity dates so you can access part of your funds at different intervals, should the need arise.
- Earn higher interest rates than traditional savings accounts. CDs can offer higher interest rates on deposits than a traditional savings account or money market accounts. The reason being is that you’re agreeing to keep your money in the CD for a certain time period.
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