Is a Certificate of Deposit Right for Me?

Financial Tip, Money

by Insight Credit Union,

October 21, 2022


Certificates of Deposit, or CDs, are a type of financial account that is designed to hold a fixed amount of money for a fixed amount of time. In return, the financial institution that issues your CD will pay you interest. 

When planning to save, you first want to figure out your goals and risk tolerance. Finding the right CD comes with some considerations. Answer these three simple questions to find out if a CD is right for you:

Question 1 of 3

Do I have a fixed amount of money that I am ready to put toward savings?

Yes - A CD may be a good option for you, since CDs usually do not allow regular deposits. Instead, you deposit a fixed amount of money at the time you open the account.

Question 2 of 3

Am I comfortable with not being able to access my money for a set period of time?

Yes - When you open a CD, it may not be worthwhile to withdraw funds before a set date, known as the maturity date. If you make early withdrawals, you may be subject to a penalty fee.

Question 3 of 3

Do I want to be able to predict how much interest I will earn on my savings, even if it means I earn less?

Yes - Sounds like a CD may be a good choice. Considered one of the safest investment options, you will know both the interest rate and the term of the CD when you open your account and sign the disclosure agreement. This makes CDs relatively predictable.

There is a lot to consider when deciding whether a Certificate of Deposit (CD) is the right savings option for you. But if you’ve answered yes to these questions, talk to your Insight Representative to open a CD today!