Higher dividend rates
CDs typically have higher dividend or interest rates than normal savings accounts. That’s because your financial institution has more of a guarantee that your money will stay in that account until the account maturity date, so they can earn more through investments. And credit unions pass on profits to account holders via those higher dividend rates. CD rates might be anywhere between 3 and 4% APY, compared to 0.01 to 0.25% for standard savings accounts.
No (or low) fees
Some types of investment and savings accounts charge a monthly maintenance fee. With a CD, if you don’t withdraw any money before the term is up, you usually don’t have to pay any fees. That means more money stays in your savings instead of you paying to save.
Lower spending temptation
Because CDs have a set time limit for how long your funds have to stay in the account before you can withdraw without a fee, there’s a psychological barrier to taking money out early. If you’re the type of person who is tempted to spend money just because it’s in your account, don’t worry: that’s normal. CDs can help temper that temptation by disincentivizing withdrawals.
Saving incentives
Because of the higher dividend rates, CDs also give a powerful incentive to keep making deposits. You know that you’ll earn more over time the more you put into that account, so it feels good to transfer more money each month.
Top Security
Banks and credit unions offer CDs, so they have the same insurance protections as checking and savings accounts. Your money is safe against the ebbs and flows of the economy. It’s also protected from hackers and security breaches, both through encryption and insurance. You don’t need to worry about the safety of your money when it’s deposited into a CD.
A guaranteed return
Other types of long-term savings involve making stock market investments. And while that can yield high returns, it’s also subject to more risk. If the stock market crashes, you have a chance of losing money. That’s not the case with a CD. The dividend rate you’re quoted when you open the account is the return you’ll get if you don’t make any withdrawals before the account’s maturity date. It’s that simple.
When you’re ready to watch your savings grow in a certificate of deposit, open your account with Rocky Mountain Credit Union. With a range of CDs available, find the one that meets your financial needs. Apply to see if you qualify, and start saving.
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