Waldo State Bank Blog

How to Get the Most out of Your Certificates of Deposit (CDs)

How to Get the Most out of Your Certificates of Deposit (CDs)

How to Get the Most out of Your Certificates of Deposit (CDs)

Whether you have a specific savings goal or want to save more this year, a certificate of deposit (CD) could be a great vehicle to help you get there. With a guaranteed rate of return, CDs offer you a low-risk way to invest your money. 

By opening a certificate of deposit account, you’ll have to set aside your money for a pre-determined amount of time. In return, you’ll earn a better interest rate than you would on a standard savings account. 

To ensure you maximize your possible CD earnings, continue reading below as we discuss some important considerations and strategies for getting the most out of your CDs.

Choose the Right Certificate of Deposit

First, you need to select the right certificate of deposit to meet your specific needs and goals. Here are some crucial factors to keep in mind when you’re opening up a CD:

  • Term: CD terms can vary from a few months to a few years; consider when you will need to access the money and choose a CD account with the right term length accordingly
  • Minimum Deposit: Each financial institution may impose its own minimum deposit requirements to open up a CD account, which can be as low as $0 or as high as a few thousand dollars; do your research and select the CD account that you can afford
  • Interest Rate: Use our interest calculator to find out which CD option is best for you. 
  • Early Withdrawal Penalties: See if there is an early withdrawal penalty imposed on a CD account, which could require you to pay a fee if you need to access your money before the maturity date 
  • FDIC-Insured: Check to see if the bank’s CD accounts are federally insured, which protects your investment amount up to a certain limit even if the bank fails 

Consider these factors before you open a certificate of deposit account to maximize your potential earnings. For instance, if your goal is to save up for a down payment on a house within the next five years, you’ll have different selection criteria than someone looking to save money to pay for their next vacation.

With this in mind, there is not one CD account that can be considered the “best.” However, based on your unique circumstances, certain terms and conditions will be better suited to your situation.

Use a “Laddering” Strategy

One powerful strategy you can employ while investing in CDs is called laddering. This requires you to invest in multiple CDs with staggering maturity dates, offering you a consistent income stream as your various CDs mature or the ability to reinvest your savings in new CD accounts upon their maturity. 

This way, you can take advantage of the higher-APY CDs with a shorter term while still earning a predictable income on another portion of your funds through CDs with a longer term. 

Bank Locally with Waldo State Bank 

Thousands of financial institutions across the country offer certificates of deposit accounts, which can make it challenging to decide where to open a CD. However, you can take advantage of many benefits if you invest locally with a community bank like Waldo State Bank

For over 110 years, we have helped our customers meet their financial goals by offering the competitive rates that big banks provide, but with a personal touch you can only get from a community bank. Our local focus means we offer savings products we know can make a difference in our community, prioritizing our relationships with our customers over the bottom line. 

We want to help you achieve your savings goals with our 9-month CD special at 5.00% APY and a minimum deposit of $1,000. To learn more about what you could earn on a CD through WSB, click here for more information on our competitive interest rates.

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