The Importance of CDs

Educational Piece of the Month: The Importance of CDs

As the first quarter of the year progresses, it appears that America is still stuck in a cycle of inflation and economic recession. As you look toward your financial future, it’s important to consider all of your investment options. Today, we investigate certificates of deposit and why they might be a smart move for your financial goals.

What is a Certificate of Deposit?

A certificate of deposit (also known as a CD) is a type of savings product that guarantees a fixed interest rate, as long as the money stays in that CD for a specified period of time. In simpler terms, you can think of a CD as a savings account with a higher-than-average interest rate, but with a timed lock on it. To take full advantage of the interest on your principal, you must leave the money where it is for the entire term. If you choose to take money out of your CD prior to the maturity date, you can be subject to penalties, such as early withdrawal fees.

Benefits of Choosing a CD

Among the many options available to you in the world of investment, CDs offer a few unique advantages:

• High interest rates. CDs often carry higher interest rates than savings or money market accounts. The actual interest rate that you can lock in depends on the institution you choose to invest with, as well as the state of the stock market as a whole. Many national institutions carry annual percentage yields (APYs) ranging from 3.80-4.50%. Community banks commonly offer APYs that span just as widely, so check the details on any offer to ensure that you get the best deal!
• FDIC insurance. Your money is secure when you invest in a CD. This is guaranteed by the Federal Deposit Insurance Corp. (FDIC), the same institution that insures banks. With this backing, you can rest easy knowing that $250,000 is protected by the U.S. Government, in the event that your chosen institution fails.

• Discouragement from impulsive spending. The greatest return on investment in a CD only comes once the maturity term has been reached. On top of this, you can be penalized for taking money out of a CD prematurely. For this reason, CDs might be a great option for those who want to get serious about their savings, but have trouble reining in their miscellaneous expenses. Putting barriers between you and your invested money can help you keep it in the bank, and make sure it’s growing instead of dwindling.

• Different terms available. One of the features of a CD is that you are setting aside money for a particular period of time, and (typically) the longer the term of the CD, the higher your interest rate will be. You’ll find CD terms starting as short as three months, with options for 12, 24, 36, 48, and 60 month terms.  

Experience the Community Bank Difference with Casey State Bank

We know you work hard for your money, so why not make your money work hard for you? We love to help our community take charge of their financial freedom, and that’s why we’re running a CD special from February 13 to March 31, 2023. 

Get a 15 month-term at 4.0% APR (4.06% APY). All you need is $1,000 minimum to open the CD. No monthly checks issued – just deposit the money and wait for your rewards when the term ends. Get in touch with us today to find out more and put your money to work for you!