Placing Savings in A CD is Not the Bad Idea You Thought it Was


I did not marry my husband because he is a banker. In fact, if I’d known before I married him how many people would stop and ask him questions about banking, how many people would want to know about interest rates and other things banking related, I might have thought twice. I’m only kidding; though it is really obnoxious how many people find out he is a banker and immediately begin asking for free financial advice from him. I know that it’s just something that goes along with any job and any person that has a question related to that line of work, but still.

He’s a banker and he knows a thing or two about savings, interest rates and high-yield savings. Unfortunately, now I know those things, too. One thing I know for certain is that CDs (certificates of deposit) are not all that fancy anymore. They were once something that people used all the time so that they could save money, make a little money and end the day with a smile. Today, I know that CDs are pretty much worthless for the yield. You’re not getting much; it’s just the way that the world works right now. However, that doesn’t mean that you can’t open up a CD and still get some pretty beneficial benefits. Why should you open a CD? Honestly, I don’t know why you should, but I do know why people should.

Early Withdrawal Penalties

I know you’re asking why this is a good thing, but I can assure you that it is. When you are trying to save money, you sometimes have to try pretty hard. Sometimes it’s tempting to take that money you’ve saved and use it on other things. For instance, wouldn’t it be fun to take that money and spend it on vacation? Of course it would be fun to do that. However, you cannot do that. You’ve got to save.

CDs make you think twice about taking money out of that account. If you make an early withdrawal, you will find that you have to pay a fee and a penalty, and no one wants to pay to access their money. For that reason, you’re thinking long and hard about what it is you want to use that money for. Now you’re more inclined to save.

Safe Savings

There is nothing more upsetting than placing your money somewhere in hopes that it will come out as more than it went into the account, only to find out that it’s not safe. CDs are an excellent way to save because you do get to earn some interest on your account, and you do get to make some money. However, what is really beneficial about it is the fact that you get to have completely safe savings. CDs are federally insurance by the FDIC (Federal Deposit Insurance Corp.).

If you have a CD with less than $250,000 in it, you’ll find that this account is going to be insured so that nothing will ever happen to your money. If you have more than that, you just need to spread it out into CDs at different banks to make sure that it is all insured. It’s a beautiful situation when you think it through; your money is safe, and that’s amazing.

You Make Money

Not all CDs are going to make you come home wealthy. In fact, few are; unless, of course, you are already wealthy. The longer you leave your money in a CD, the more you will make. It’s typical that longer terms offer higher rates. Additionally, if you have more money to save in your CD, you also have more interest to make. The thing is that many people assume that you cannot make money with a CD. You can, but you do have to do it the right way. Making money from CDs is not always easy, but it’s always something that’s a possibility if you do it the right way and you pick the terms that work best for you to actually make some money.

If you’re in a situation in which you are looking for a place to place your money so it’s safe, try a CD. It’s true that there are a number of locations you can place your money and ensure that it’s safe and that it’s going to earn some interest. A CD is not right for everyone, but it is something that works well with many people who do have money to save and want to do it in a way that’s safe and guaranteed. Check with your bank as well as other local banks to find out who is offering the best rates and terms, and begin the path to saving money the safe way. You won’t regret the decision if it’s the right decision for you.

Photo by Getty Images


Leave a Reply