Certificates of Deposit

If you’re looking to sock away a nice chunk of money that you have no intention of touching for a while, at a decent interest rate, then you might want to think about a certificate of deposit (CD)—sometimes called a share certificate.

It’s up to you to choose the time period for the CD, which is called the maturity date. It can range from a few months to a few years. If you need to take out some of the money before the maturity date, you’ll be charged a hefty early-withdrawal fee.

Here are some things to consider before opening a certificate of deposit:

• What are the specifics? Find out the different maturity dates offered and what the early-withdrawal fees are.
   
• What is the interest rate? The interest rate tends to increase the longer the maturity date. Plus, the interest is compounded, which means that the interest you make one month will be gaining interest of its own the next.
   
• Are my savings safe? Like with other accounts, CDs should be federally insured. At a credit union, look for the National Credit Union Share Insurance Fund (NCUSIF).

Not sure if you should be saving or investing? We have a Saving vs. Investing page to help you decide. Plus, our savings calculator can help you with the math. Savings 101 is also here to help you decide when and how much to save.