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A certificate of deposit (or CD) is a savings instrument offered by a bank or credit union that has a fixed date of maturity and a fixed interest rate. A credit union might use the term Share Certificate, Term Certificate or just Certificate to refer to the same product. Most CDs require a minimum deposit amount and may offer rates contingent on the size of the deposit. Certificates of Deposit are insured by the FDIC for bank deposits, or by the NCUA for credit union deposits, up to $250,000 per individual depositor. As a CD depositor, you are committing to leave your funds in the CD for the term of the CD. As a result of that time commitment, rates offered on CDs are typically higher than traditional savings or money market accounts. Keep in mind that an early withdrawal of funds will likely come with a financial penalty.
The future value of your savings plan is dependent on the starting balance, additional monthly savings and the rate of return you receive on those savings. For the most accurate valuation, you will have to separate taxable accounts such as savings and CDs from your tax-deferred accounts such as 401(k)s and college 529 plans.
Whether you are trying to save for big screen television, a new car or for a down payment on a new home, time, money and rate of return will all be determinant factors of when you will meet your savings goal.
Learn more about the significance of capital ratio, which is calculated by dividing a bank’s current assets by its current liabilities.
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Receive alerts, freeze funds, approve transactions and more! Setting up your preferences for your debit card is quick and easy.
If you’re wondering how long it takes for a debit card control or alert to take effect, the answer is immediately. Learn more!
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