What is a Certificate of Deposit and How Can it Benefit You?

A Certificate of Deposit (CD) is a type of savings account that pays a fixed rate of interest for the term you choose. CDs are considered low-risk investments, with higher yields than most traditional savings accounts. If you’re looking for an investment that provides stability and reliability, then a CD may be the right choice for you.

How Does It Work?

A CD works like any other type of savings account — you deposit money into the account and earn interest on your balance according to the terms of the CD. The main difference between a CD and other types of savings accounts is that the rate of return is locked in for the entire term. This means that if interest rates rise during your CD’s term, your rate will remain unchanged until maturity. On the other hand, if rates fall during your term, you’ll still be earning a higher rate than what would be available from other types of accounts.

The Benefits

CDs come with several advantages over other types of investments, such as:

Reliability: CDs provide more reliable returns than stocks or mutual funds. Since there’s no risk associated with them, you don’t have to worry about losing money due to market fluctuations.

Safety: Your deposits are insured up to $250,000 by the Federal Deposit Insurance Corporation (FDIC). This means that even if something were to happen to your bank or credit union, your money would still be safe up to this limit.

Higher interest rates: CDs typically offer higher yields than regular savings accounts or money market accounts — especially if you opt for longer terms. Longer terms usually come with higher yields as well as bonus offers.

The Takeaway

Certificates of Deposit can be great options for those who want a low-risk investment with reliable returns and peace of mind knowing their money is safe in an FDIC insured account. At RMLEFCU, we offer a one-year CD at up to 3.75% APY*. If you’re interested in learning more about our one-year CD, please don’t hesitate to reach out to us at (303) 458-6660, visit our website, or stop by any of our branches. Our Certified Financial Counselors would be more than happy to help you decide whether a CD is the right account to select for your hard-earned cash.

*Annual Percentage Yield. Actual APY based on deposit amounts over $1000. Contact us for more details.