No, we aren’t talking about your old CD player. When rates are back on the rise, it matters where your money is being deposited. Traditional savings accounts are slow to respond to those increasing rates, as your wallet will continue to feel the pinch of inflation. A CD might be the right type of account to move your savings into.
What is a CD?
A CD is called a Share Certificate here at a credit union or known as a Certificate of Deposit at a bank. It is a special kind of savings account with a fixed interest rate that is usually higher than your average savings account. These Share Certificates have a term and a maturity date, meaning your rate and the funds inside are deposited and stay in the account for that amount of time until the maturity date rolls around. Then, you can withdraw the money without a penalty, or it rolls over into whatever the rate is at that point in time. These terms can range anywhere from a few months to several years, based on your unique needs. Now that you know what a Share Certificate is, here are a couple situations when they may be right for you:
- You want higher returns without the market risk. Depositing money into a Share Certificate can make sense if you want to avoid the risks involved in the Stock Market and earn more interest back than other traditional savings accounts. Like regular savings accounts and unlike stock market investments, Share Certificates at Northeast Credit Union are also insured by the National Credit Union Administration (NCUA), so you would get your money back in the unlikely event your financial institution goes bankrupt. The funds can also be withdrawn in emergencies if you are willing to pay the associated early withdrawal penalty fees.
- You have some money set aside that you’re saving up. Share Certificates require a larger lump sum to be opened than most basic savings accounts, $500 is a common amount to see required up front. If you’ve been building up your savings and have this deposit ready upfront, a Share Certificate is a great way to keep the money safely tucked away while you allow it to accrue interest on its own. If you are saving up for a big purchase, our Share Certificates are a great way to plan your future.
Interested in learning more about our Share Certificates (CDs)? Visit necu.org/share-certificates to find the best option for your unique needs and put your money to work.