Cons

You can’t withdraw before the maturity date without a penalty 

If you have a 12-month CD, your money is locked in there until the maturity date. If you need to withdraw money before then, you pay a penalty. But if you leave your funds deposited until that maturity date, you’re in the clear. That lack of liquidity can be a downside for some. 

It earns lower rates than some other types of savings

There are other ways to potentially help your money grow faster, like investing in the stock market. The long-term average on an S&P 500 index fund is almost 6.5%, but that’s fluctuated as high as 19.5% and as low as -15.9% just in the last year. The downside of those methods is that they come with a lot more risk. 

Inflation rates factor into the value you get 

Say you put a portion of your savings in a long-term CD. If inflation takes off, and you open the account with a lower dividend rate than the rate of inflation, your money might not actually be growing relative to inflation. 

Pros 

You earn a higher dividend rate than other accounts

Traditional savings accounts have dividend rates that start around 0.01% Annual Percentage Yield at Rocky Mountain Credit Union. CDs, on the other hand, vary depending on term length but start around 3.00% APY and can range up to 4.2% APY. That’s huge, especially compounding monthly. It’s easy to watch your money grow with that high dividend rate. 

Maturity dates help encourage saving 

When you deposit money in a CD, you can’t withdraw it before the maturity date without paying a penalty. In some cases, that can be a powerful incentive for savings, especially since many certificates allow you to continue making deposits after you open the account. It’s generally less tempting to spend your savings if it comes at a cost. 

Your money is safe and insured 

With money in a CD, you know it’s safe with a financial institution you can trust. And even if the worst happens, it’s protected. At RMCU, accounts are insured up to $250,000 by American Share Insurance, so you know your money is secure. 

Reliable returns that don’t rely on market conditions 

Those high dividend rates are locked in when you open your CD, and they don’t change until you reach the maturity date. That means you don’t have to worry about the stock market dropping or conditions changing: your money is more than safe and secure. It’s also going to continue to grow, no matter what. 

Lots of choices for account type and terms 

Choose your own adventure when you choose a CD. At RMCU, you’ll find CDs ranging in term length from 90 days to 5 years. Some have $1,000 minimum balances, while others have $1.00 minimums. The term and type of CD you choose is up to you, but you can find the right one that will meet your needs. 

When you’re ready to grow your money, open your CD with RMCU. Take your pick, and put your money somewhere you can trust.  

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