Find the best CD rates and compare certificates of deposit from leading national banks. All accounts can be opened securely online.
These days, it’s getting harder and harder to emergency savings or other money that you might need on short notice. (If your car breaks down, you want to tap your savings now, not in three months when your CD matures.)
When to save with CDs
A CD make an attractive option for short-term savings goals. CDs can be a smart way to save for a major purchase like a new car, vacation, wedding or the down payment on a home. When saving for a short-term goal, you may be able to earn a better return on your money in stocks or bonds, but investing involves risk; with a CD, you know you’re principal will be there for you at the end of the term.
If, for example, you have been saving for home and know you will not be buying for another year, throw your savings into a 1-year CD to get a better rate than you could in an online savings account.
Finally, if you are an aggressive saver and have at least two months of emergency cash and are working on building more, you can do what is called CD bracketing or CD ladders.
Say you are putting $400 a month into emergency savings. Once you have, say, three months living expenses saved, you can begin to buy CDs with different maturity dates. The goal is to think about what would happen if you needed your emergency savings in the future, and to have different CDs mature each month after your initial cash reserves has run out.
The higher CD rates get, the more CD ladders make sense; it all depends on how much extra juggling you want to do to earn a few extra points in interest.
Learn more about: