
A CD secured loan is a type of loan that uses a Certificate of Deposit (CD) as collateral. This loan allows you to borrow a sum of money and use the CD as security for the lender.
The lender holds the CD until the loan is repaid, at which point the CD is returned to you. This means you can't access the money in the CD while you're paying off the loan.
CD secured loans typically have a fixed interest rate and a fixed repayment term, which can range from a few months to several years. This makes it easier to budget and plan your repayments.
The interest rate on a CD secured loan is often lower than other types of loans, since the lender has the security of the CD to fall back on.
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What Is a CD Secured Loan?
A CD Secured Loan is a type of loan that allows you to use your Certificate of Deposit (CD) as collateral. This means you can borrow money against the value of your CD without having to withdraw the funds, thus avoiding early withdrawal penalties.
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People with long credit histories and good credit scores will benefit the most from a CD Secured Loan, as they can borrow a larger sum of money at a low interest rate. They can also build positive credit history over time by making timely loan payments.
If you have a CD, you can secure your OptionLine loan with it and borrow up to 100% of the value of the certificate. Your CD will continue to earn interest and you won't face any withdrawal penalties.
Here are the benefits of a CD Secured Loan:
- Your CD will continue to grow: Your CD will continue to earn interest throughout the loan's life, even when repaying.
- Speedy access to resources: These loans often take less time to get approved, quickly getting you the money you need.
- Lower interest rates: Your rate will be based on your loan length and more, but it's likely to be much lower than other loans due to its reduced risk on banks.
What Is Secured?
A CD-secured loan is a type of loan that uses your certificate of deposit as collateral, allowing you to retain your investment without penalty.
The loan balance is backed by the money in your CD, which reduces the risk for the lender and makes them more willing to offer lower interest rates.
Lenders can pull back on eligibility requirements for CD loans because they have less risk involved, making it easier to qualify.
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This can be a big advantage for borrowers who might not qualify for unsecured personal loans, but it's essential to remember that the lender can seize your CD if you default on the loan.
The lender can seize your CD to cover delinquent payments if you fail to make your monthly payments for an extended period of time or default on the balance.
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What Are Secured?
A CD-Secured loan is a type of personal loan that uses your CD as collateral to provide you with a loan. You'll receive a certificate of deposit that grows in value over time, but you won't be able to make withdrawals until the maturity date, which can range from six months to five years.
These loans are considered less risky for banks because they use your CD as collateral, making them a more secure option. This can result in lower interest rates compared to other loans.
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You can use a CD-Secured loan to access funds quickly, with approval often taking less time than other loan types. This can be a lifesaver during an emergency when you need money fast.
The interest rate on a CD-Secured loan will be based on the loan length and other factors, but it's likely to be lower than other loans due to the reduced risk on banks.
CD Secured
A CD Secured loan is a type of loan that uses a certificate of deposit (CD) as collateral. This can be a good option for individuals who need to borrow money but want to leverage their existing savings in a CD without having to withdraw the funds and lose the interest they are earning.
The interest rates on CD Secured loans are relatively low, and they carry a lower risk than other secured loans. This makes them a good choice for people with poor credit or a thin credit history, as they can use the loan for credit-building purposes.

To qualify for a CD Secured loan, you typically need to have a CD with a certain minimum balance. This balance will serve as collateral for the loan, and the lender will lend you up to 100% of the value of the CD.
Here are some key benefits of CD Secured loans:
- Builds credit history, assuming timely loan payments
- Low interest rates and relatively low risk
- Can borrow up to 100% of the value of the CD
Keep in mind that you'll need to make consistent, on-time payments to build credit with a CD Secured loan. If you default on the loan, the lender can seize your CD, and this will severely impact your credit score.
Benefits and Features
A CD secured loan is a great option if you need to borrow money, but don't want to risk your credit score. The loan is secured by your CD, meaning the lender can claim the CD if you fail to repay the loan.
The interest rates on CD secured loans are lower compared to unsecured loans, which can save you money on interest payments. You can use the funds from a CD secured loan for a variety of purposes, including debt consolidation, home improvements, or unexpected expenses.

Your CD continues to earn interest even while it's being used as collateral for the loan, so you won't miss out on potential earnings. With regular, on-time payments, you can positively impact your credit score and even build or improve it.
Since the loan is secured by your CD, qualification requirements may be less stringent than for unsecured loans, making it easier to qualify. You can also save money on interest payments and preserve your savings by not having to break your CD.
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Pros and Cons
A CD-secured loan can be a great option for those in need of quick access to funds, but it's essential to weigh the pros and cons before making a decision.
One of the main advantages of a CD-secured loan is the ease of the application process. You can often get loan approval quickly, sometimes within hours, and receive funds within a day or two.
Borrowers with poor credit may also qualify for a CD-secured loan, making it a good option for those who are struggling to get approved elsewhere.
Here are some key pros of a CD-secured loan:
- Easy application process: approval can be obtained within hours and funds received within a day or two
- Continued growth: your CD continues to earn interest throughout the life of the loan
- Long repayment terms: banks and credit unions usually offer generous terms, sometimes allowing you to repay funds for up to 10 years
- Good for those with bad credit: borrowers with poor credit may qualify for a CD-secured loan
However, it's also worth considering the potential downsides. For example, not all banks and credit unions offer CD-secured loans, so you may need to shop around to find a lender that does. Additionally, you'll need to have an active CD to qualify for the loan, and if you're unable to pay off the loan, the financial institution will deduct the funds from your CD to recoup what's owed.
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Pros
The pros of CD-secured loans are definitely worth considering. One of the biggest advantages is that the application process is often quick and easy, with approval happening within hours and funds available within a day or two.
With a CD-secured loan, your CD continues to earn interest throughout the life of the loan. This means you can still benefit from the interest on your CD while also having access to the funds you need.

Long repayment terms are another benefit of CD-secured loans. Banks and credit unions typically offer generous terms, allowing you to repay funds for up to 10 years.
This can be a huge relief for those with poor credit, as CD-secured loans may be more accessible than other loan options. Borrowers with bad credit may qualify for a CD-secured loan, giving them a chance to rebuild their credit or cover unexpected expenses.
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Cons
Not all banks and credit unions offer CD-secured loans, so you may not have access to this type of loan.
If you do qualify, you'll need to already have an active CD with funds in it. This can be a barrier for those who don't already have a CD or don't have enough money in one to qualify.
Some CD loans come with interest rates that are higher than your CD's rate, which means you could end up paying more interest overall.
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You won't be able to cash out your CD until after you've paid off the loan, which can be a setback if you need access to your money.
If you're unable to pay off the loan, the financial institution will take the funds directly from your CD, which can result in a loss of funds.
When Is Using Meaningful?
Using a CD loan can make sense if you're in a financial pinch and can't borrow money from other sources. In such cases, a CD loan can be a good option.
You can use a CD loan to consolidate high-interest debt balances with minimum payments that are draining your wallet. This can help you get back on track with your finances.
A CD loan can also be used for a small, much-needed home repair or renovation. This can help you avoid larger costs down the line.
How It Works
To get a CD secured loan, you'll need to have a Certificate of Deposit (CD) with a bank or credit union. This CD will serve as collateral for the loan.

The interest rates for CD secured loans are often lower compared to unsecured loans, which means you'll save money on interest payments. This can be a huge advantage if you're looking to borrow money.
You won't have to break your CD to get the loan, allowing it to continue earning interest and potentially avoiding early withdrawal penalties. This is a big plus, especially if you've had your CD for a while.
Regular, on-time payments can positively impact your credit score, making it easier to get credit in the future. This is a great opportunity to improve your credit history.
Since the loan is secured by your CD, qualification requirements may be less stringent than for unsecured loans. This means you might be able to qualify for a loan even if you have a less-than-perfect credit history.
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Loan Basics
To get a CD secured loan, you need to apply for it if you have a CD with PDCU.

The loan amount you can borrow is up to the value of your CD.
The interest rate on a CD secured loan is generally lower than that of an unsecured loan, due to the reduced risk.
You can choose the repayment terms during the loan application process, and they can vary in length.
Even though your CD is used as collateral, you still earn interest on it and it remains part of your savings.
Rates
Rates for CD Secured Loans are competitive and vary depending on the type of loan. For example, a Share Covered loan can be as low as 5.25% APR after 84 months.
The Credit Builder Loan, on the other hand, has a higher interest rate of 13.00% APR after 18 months. This loan is designed for borrowers who want to build credit.
A CD Secured Loan, which uses your existing CD as collateral, offers an even lower rate. The rate is APY + 3.50% after 84 months, making it a more affordable option for those with a CD to secure the loan.
Here's a breakdown of the rates for different CD Secured Loan options:
Who Is Eligible

People with long credit histories and a good credit score are ideal candidates for a CD loan, as they can borrow a larger sum of money at a low interest rate.
Individuals with lower credit scores can still benefit from a CD loan, as timely loan payments can help build positive credit history over time.
A CD loan is also a good option for those who want to access their CD funds without facing early withdrawal penalties, allowing them to borrow up to the amount currently in their account.
However, it's essential to compare any fees associated with a CD loan to the CD's early withdrawal penalty to ensure it's the best option.
Frequently Asked Questions
Is a CD-secured loan a good idea?
A CD-secured loan may be suitable for those with a long credit history and good credit score, but it's essential to consider alternative borrowing options first. Consider your financial situation and explore other options before deciding on a CD-secured loan.
Sources
- https://www.bankrate.com/loans/personal-loans/secure-personal-loan-with-cd/
- https://www.peopledrivencu.org/loans/personal-loan-options/cd-secured-loans/
- https://www.syb.com/consumer-loans/cd-secured-loans
- https://www.fultonbank.com/Personal/Borrowing/CD-and-Stock-Secured-Line-Of-Credit
- https://ascentcu.com/share-secured-certificate-secured-loan/
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