Exploring How Certificates of Deposit Work
Certificates of deposit, or CDs, offer a higher-yield alternative to traditional savings accounts. Although you can’t immediately withdraw your money from a CD as you can with a savings account, the interest will build up faster, so your money grows quickly until the date of maturity. GCS Credit Union offers competitive rates on CDs to our members. Is a CD right for your saving needs? Here is a look at how they work to help you decide.
CDs are essentially a type of savings account. You open the account using a deposit of your choosing, as long as it meets the minimum requirements set by your credit union. The difference is that, unlike a savings account, you can’t withdraw the money in the CD without paying a penalty until it has reached the age of maturity. The age of maturity varies depending on which CD you choose. Some CDs run for as little as seven days, while others don’t reach maturity for five years. In exchange for not having access to your money, the credit union pays a higher interest rate on the money you have in the account.
If you have a stable income and money sitting in your savings account that you feel comfortable not having access to for a set period of time, a CD is a great opportunity to get a better return. They also offer a good way to save money for major investments, like a down payment on a home or college tuition. You’ll increase your savings faster than by simply setting aside that money in a traditional account without the risk associated with stocks. If you’re concerned about not having access to your money, start with a short-term CD and then renew it at the end of the term as desired.
Are you interested in a CD? Visit GCS Credit Union to learn more about our flexible CD products. Our full-service credit union also provides checking accounts, auto financing, credit and debit cards, and much more. To learn about our services and for information about joining our O’Fallon credit union, please call (618) 797-7993.