Medicare doesn't cover all of your health costs? Find Agents in Your State 

Select State:

What Is The Purpose Of A Certificate Of Deposit?

Certificates of Deposit or CDs are considered time deposits. You choose an amount and length of time you would like to keep the money in the bank. This is considered a certificate of deposit. The purpose of a certificate of deposit is to ensure the safety of your money while building more interest than a regular savings account. CDs guarantee a return on your money and are the most secure form of investment.

How Do They Differ From a Regular Savings Account?

Certificates of deposit are insured as a savings account is so they are risk free as a savings account is. The main difference is that a certificate of deposit unlike a savings account has a specific time frame that you cannot access your money for. These are only a good choice if you can afford to lose access to a specific amount of money for a certain period of time.

Why Do People Get CDs

People choose to get certificates of deposits for several reasons. The most common are people who do not have money to lose. People such as the elderly, living on fixed incomes, young kids who do not have a large income, or people who have limited funds.

When Can You Access the Money?

You and your bank will agree on a specified time period. The most common lengths of time for CDs are three months, six months, and a year to five years. The time period will be your decision. The longer you agree to keep your money in that institution you will receive a higher interest rate. Thus you will make a higher rate of return.

Where Can You Get CDs

Certificates of deposit can be obtained from banks, credit unions, savings and loan associations, and brokers. These institutions offer different types of CDs, so be sure to understand the terms that you are signing up for

Send this page to a friend ...

What Is The Purpose Of A Certificate Of Deposit?

Related posts

Leave a Reply