Certificates of Deposit are basically time deposits. You put your money in the bank for a fixed amount of time and after that time you can either get your money and the interest it has earned or have it rolled over into a new CD.
The interest rate on certificates of deposit is usually(not always so be sure to check!) higher than on savings accounts. They are also covered by Federal Deposit Insurance just like savings accounts so they are just as safe as savings accounts.
There is usually a minimum deposit amount. Some banks have them for as low as $500 but usually the minimum is $1000 or more. The highest interest rates are on the most expensive certificates(with some exceptions).
If you withdraw the money early there is a penalty so you should not use these for emergency funds. They should only be used if you are certain you won’t need the money till the certificate matures.
My grandmother had a lot of these. She laddered then so one was coming due every year. That is a good way to use them but be careful! Make sure you won’t need more than what is coming due that year. The penalties can really hurt.
These can be wonderful investments for goals where you don’t want to take any risks of losing the money but would like to earn more interest than on a savings account. They are great to have as part of a portfolio of different investments.
Aurorabankfsb offers certificates of deposit to help customers build a solid financial future. They offer some of the most competitive interest rates in the marketplace, a wide range of account terms, low minimum deposit, automatic renewal at maturity, and FDIC insurance.