Certificate of Deposit Savings for Beginners

If you're new to certificate of deposit (CD) savings, don't worry, it's easier than you think. A CD is a type of savings account that's insured by the FDIC, which means your deposit is protected up to $250,000.

CDs typically have a fixed interest rate and a set term, ranging from a few months to several years. This means you'll earn a higher interest rate than a traditional savings account, but you'll need to keep your money locked in the CD for the specified term to avoid early withdrawal penalties.

CDs are a low-risk investment option, making them a great choice for beginners. You can earn interest rates ranging from 1.5% to 5% APY, depending on the term and institution.

To get started, you'll need to choose a bank or credit union that offers CDs, and select a term that works for you. Some institutions even offer online banking and mobile apps to make managing your CD easy and convenient.

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Locking your money into an account in exchange for a higher interest rate can be a big decision. You need to know about common CD terms to make an informed choice.

There are various types of certificates of deposit, each with its own term length. A CD term length can range from a few months to several years.

If you're looking for flexibility, a short-term CD might be the way to go. This type of CD typically has a term length of less than a year.

Consider your financial goals and risk tolerance when choosing a CD term. A longer term can earn you a higher interest rate, but it also means you'll have to keep your money locked in the account for a longer period.

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No-Penalty CDs offer a unique benefit: you won't be charged an early withdrawal penalty. This means you can access your money when you need it without incurring a fee.

The best no-penalty CDs will give you a slightly higher interest rate than high-yield savings accounts. For example, the Farmers Insurance Federal Credit Union No-Penalty Share Certificate offers a 4.50% APY.

To open a no-penalty CD, you'll typically need to make a minimum deposit, which can vary. The Technology Credit Union 5 Month No Penalty CD, powered by Raisin, requires just $1 to get started.

Some no-penalty CDs have higher minimum deposit requirements. The America First Credit Union Flexible Certificate, for instance, requires a $500 deposit.

Here are some of the top no-penalty CDs:

6-Month CDs are a great option for those who want to earn elevated rates on their savings for short-term gains. They're best for individuals who are uncomfortable having limited access to their cash in the long term.

Interest rates for 6-month CDs are around 5%. This is a good option for those who may just be getting started with saving, or who don't have a large emergency fund for unexpected expenses.

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Some popular 6-month CD options include Newtek Bank 6 Month CD, Vibrant Credit Union 6 Month Certificate Special, and TotalBank 6 Month CD. Each of these options has its own unique features, such as minimum opening deposits and APYs.

Here are some specifics on these 6-month CDs:

CD rates are impacted by the Federal Reserve's decisions, which can affect the interest you earn on your deposits. The Fed's rate influences what banks and credit unions are willing to pay consumers for their deposits.

The Fed's rate changes can have a significant impact on CD rates. For example, between 2021 and 2023, average CD rates tripled or quadrupled, depending on the term. This means that if you open a long-term CD right before a Fed rate hike, your future earnings may be hurt.

Consider the expected start of a project or goal when determining the CD term length. If you're just socking away cash with no particular goal, you may opt for a longer term and higher interest rate.

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Jumbo CDs are a type of CD that offers better rates than traditional CDs, making them a good choice for those with a lot of money to invest.

A jumbo CD typically requires a much higher minimum opening deposit than a traditional CD, but the higher deposit is worth it for the better interest rates.

If you have a large sum of money to put into a CD, a jumbo CD can be a great option to earn higher interest rates.

For example, jumbo CDs might be a good choice for someone who has saved up a significant amount of money and wants to earn more interest on their savings.

Jumbo CDs usually offer better rates than traditional CDs, so if you have the money to invest, it's worth considering a jumbo CD.

In exchange for the higher minimum opening deposit, jumbo CDs offer higher interest rates that can help your money grow faster.

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If you're looking for the best CD rates today, it's essential to consider the term length. Credit unions often offer competitive rates, and anyone can join these credit unions to open a CD.

The best CD rates are currently offered by credit unions, with some of the top rates including 4.50% APY for a No Penalty CD, 4.95% APY for a 3 Month CD, and 5.25% APY for a 6 Month CD.

Here are some of the top CD rates by term:

Remember, CDs have penalties for early withdrawal, so make sure you can keep the money in the account for the specified term.

Dow Credit Union offers the top 3-year, 4-year, and 5-year CD rates, making it a great option for those looking for a long-term savings plan. It also has a low minimum opening deposit of $500.

First National Bank of America offers CD term lengths ranging from 6 months to 10 years, giving you flexibility in choosing the right term for your needs. The bank's 2-year CD has a minimum opening deposit of $1,000.

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Here's a comparison of the minimum account opening balances for some of the top CD rates:

Remember, always check the early withdrawal penalties before opening a CD, as they can vary significantly between institutions.

If you're looking for a high-yield savings account, you might want to consider LendingClub's LevelUp Savings Account, which offers up to 5.00% APY with no minimum balance requirement.

The Prism Bank 3 Month CD, powered by Raisin, offers a competitive 4.40% APY with a minimum account opening balance of just $1.

Discover's 1 Year CD has a relatively low minimum balance requirement of $0, and it offers a 4.10% APY.

You can also consider the Barclays 6 Month Online CD, which has a $0 minimum balance requirement and a 4.50% APY.

The Discover 18 Month CD has a $0 minimum balance requirement, but it only offers a 3.80% APY.

Here's a comparison of some nationally available deposit rates:

The mph.bank 3 Year CD offers a 4.34% APY with a minimum account opening balance of $1.

Sallie Mae's 14 Month No-Penalty CD has a $1 minimum balance requirement and a 3.95% APY.

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Bank CDs are protected by federal insurance, which means up to $250,000 per depositor, per account category is secure in a bank account. This is a crucial consideration when choosing between a bank and a credit union.

The best banks and credit unions for CDs offer a high rate on certificates of deposit with good perks and low minimum opening deposits. This is why it's essential to research and compare rates before making a decision.

Bear in mind that money is safe at a federally insured financial institution, which gives you peace of mind when choosing a bank or credit union.

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Farmers Insurance Federal Credit Union offers a 9-month no-penalty share certificate with a strong rate.

You can join this credit union by also joining the American Consumer Council for free, or if you work for Farmers or are a family member of someone who's already part of Farmers Insurance Federal Credit Union.

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There's a limit on withdrawals from your certificate - you can only withdraw money once a month, and not during the first month.

This credit union has just one term option: a 9-month no-penalty share certificate.

With a no-penalty CD, you won't face early withdrawal penalties if you need to access your money before the term ends.

You can withdraw money from your CD once a month, but be aware that you can't withdraw during the first month of the term.

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EagleBank 12 Month CD is a great option for those looking for a high-yield CD with a short term. It offers the best 12-month CD rate at U.S. banks, along with American Bank.

The minimum opening deposit is $0, making it easily accessible to anyone. You can also open a high-yield savings account and online CDs ranging from 6 months to 18 months if you don't live near a branch.

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One thing to keep in mind is that you'll only be able to deposit a maximum of $500,000 into a CD. Additionally, EagleBank's mobile banking app has lackluster ratings in both the Google Play and Apple stores.

Here's a summary of the EagleBank 12 Month CD terms:

This CD is a great option for those who want to lock in a high-yield rate for a short period of time. Just be aware of the limitations on deposits and the mobile banking app's ratings.

Before choosing a bank or credit union for your CD, check their Better Business Bureau (BBB) page to see if they have any complaints filed against them. It's also a good idea to research if they've been involved in any recent lawsuits.

You can also look into the bank's safety record by checking for recent data breaches. A bank with a good reputation will prioritize the security of their customers' accounts.

Consider banking with an eco-friendly bank that uses your money to help the environment. These banks are a great option for those who want to make a positive impact with their banking choices.

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