Are you someone with a set goal in mind, but you’re still trying to figure out the most efficient way to save? A Certificate of Deposit (CD) might just be the answer to your needs!
A CD can be a great savings option for shorter/-term goals that you have, but there are some things to keep in mind when making your decision to open one.
CDs can be a great way to grow your money because they’re relatively risk-free and one of the safer saving options, and varied terms allow you some flexibility. In most cases, the interest rates on CDs are often fixed, meaning you’ll have a predictable return compared to stocks and bonds, which are more volatile because of how rates can change unexpectedly. As a bonus, if you’re someone who struggles with impulse spending and you know you have something bigger to save up for, a CD can be a big help in avoiding those temptations as you can’t withdraw funds from it until it reaches maturity.
While there are definite benefits to CDs, there are a few drawbacks to them that you should consider when considering opening one. As mentioned before, you’re unable to withdraw any funds from the CD prior to its maturity because most CDs have penalties for doing so. The penalties can be helpful if you’re trying to avoid impulse and overspending, but if you find yourself in an emergency and needing to withdraw early, it’s a drawback to keep in mind. While there are some CDs with variable interest rates, opening a CD with a fixed interest rate means that you won’t benefit if rates go up. So, if you have a longer-term CD that can’t keep up with inflation, you could risk losing some purchasing power.
When it comes to saving for a bigger goal, it doesn’t hurt to consider opening a CD! Like with any financial decision you make, it’s important that you consider all your options. A solution that works for a family member or friend might not be the answer for you. If you’re not sure, you can always speak with a NuMark expert to discuss your options so you feel confident that you’re making the best decision for your financial needs.
Whether you’re ready to get started saving, or simply want to compare rates, click below to learn more about NuMark CDs and open an account online!
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