The Ins and Outs of CDs: A Safe Way To Save

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Certificate of Deposit:  Secure Savings


What is a Certificate of Deposit?

A Certificate of Deposit (CD) is a safe, secure savings account that earns higher interest rates than a standard savings or money market account. 


The difference between a CD and Savings Account

While consumers can withdraw from a savings account at any time, CDs have specific term commitments for savings, which usually add a fee to any withdrawal before the commitment is fulfilled.


Typically, CDs are offered for as short as 6 months and as long as 60 month terms.  This investment is locked in for the same interest rate until the term limit of the CD matures.


Types of savings goals used for CDs

Most savings goals can benefit from some funds being invested in CDs, including:

  • Future college expenses
  • Down payment on a home or vehicle
  • Long-term emergency funds
  • Future retirement


What happens when my CD term matures?

When CD terms end, there are typically a few options:

  • Renew the CD with the same term at the new current rate.
  • Move CD to new term limit (and new rate).
  • Transfer funds into a savings, checking, or other account.


Laddering CDs can take your savings further

One of the benefits of utilizing CDs for saving is having different term commitments.  The practice of distributing funds into different CDs commitments at the same time is called laddering CDs.  This gives the consumer flexibility to take advantage of different rates and a revolving access to funds as terms mature.


CDs are federally insured

At American Eagle Credit Union, the NCUA (National Credit Union Administration) provides insurance on deposit accounts up to $250,000 for single ownership accounts.  And by structuring the ownership of accounts, it’s possible to increase this federal insurance coverage up to $1,000,000.



Interested in learning more about investing with CDs?

There are many ways to take advantage of CDs—whether you’re starting to save for large purchases, retirement, or future college expense.  There are personal service counselors at American Eagle Credit Union ready to help navigate your choices.  Visit your local AECU branch or call our Member Contact Center at 877-325-2848.

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