Is a CD the Right Savings Choice for You?

The sheer number of ways to save your money can seem overwhelming. Choices range from earmarking a portion of your checking balance for savings, to opening a second checking account specifically for savings, to using a traditional savings account or certificate of deposit. Separating funds or adding a savings-dedicated checking account seem like simple, no-fuss options, but many people can’t resist the temptation of easily accessible money—and are missing out on potential interest earnings. Savings accounts are a safe alternative, but you could be trading earning potential for convenient access. So, what about certificates of deposits (CDs)?

What is a CD (certificate of deposit)?

A CD is a federally insured savings account that features a guaranteed fixed interest rate—that’s typically higher than most saving accounts—for a set period of time. (During that time, you won’t be able to access your money without penalty.)

A CD might be right for you if:

1. You have time-specific savings goals

CDs are perfect for savers who have a specific goal date in mind, whether it’s a wedding, a vacation, a dream car purchase, or to pay for a child’s tuition. Predetermined intentions for your CD not only make it easier to relinquish temporary access to your money, it will also ensure your money is safe and sound in the interim.

2. You want better returns than a savings account

Many savings accounts aren’t as profitable as you would expect. According to fdic.com, as of April 2021, the national average savings interest rate is hovering in the .06% range. To put that number into perspective, a $10,000 balance would earn just $6 in interest if deposited for one year. CDs offer a much higher interest rate, especially among online banks, like BrioDirect.

3. You won’t need access to these funds for months—or years

Whether you’re saving for that vacation or your big day, you should consider any funds deposited into a CD nonexistent until the term has ended. That means you need to have a separate set of funds to manage unexpected financial needs, like emergencies or unemployment, in the meantime.

4. You want guaranteed returns

One of the best things about CDs is the guaranteed rate of return. Unlike variable savings account rates or high-risk investments like stocks and bonds that are susceptible to fluctuating value, you lock in your rate when you open your CD and it remains constant for the length of your term. And unlike stocks and bonds, CDs from banks like BrioDirect are FDIC insured for added peace of mind.

If most or all of the above applies to you, a certificate of deposit is a great—and rewarding—way to meet your savings goals. Now you need to find a CD with a great rate and right terms from a bank you can trust, like BrioDirect. BrioDirect’s high-yield online CDs offer some of the best rates around, terms from 30 days to 60 months, a guaranteed rate of return, and the security of FDIC insurance.