Learning About Finance and Money
3 Benefits Of Using A Certificate Of Deposit For Savings
Jordy De Pijper
If you are preparing to start borrowing money, you might be comparing savings accounts and looking at different interest options. However, one good option that you might not have looked into yet -- a certificate of deposit, or COD -- could be a better choice than all of the savings accounts that you have been comparing. These are a few reasons why.
1. You'll Be Less Likely to Touch It One struggle that a lot of people deal with is leaving their money in savings rather than spending it. It can be tempting to raid your savings if money's running a little bit low or you want to treat yourself, but doing so can make it impossible for your money to grow. Even though it is still possible to remove money from most certificates of deposit, there is typically a hefty withdrawal fee for doing so, unless you find a no-penalty COD. This can help prevent you from touching the money unless you absolutely need it.
2. You Can Earn More in Interest When compared to most savings accounts, a certificate of deposit can help you earn a lot more in interest. Since one of the primary benefits of putting money in savings is the fact that you can watch your money grow, this is an important factor. Still, to ensure that your money earns as much as possible, it's smart to compare interest rates between different banks. Then, you can choose the certificate of deposit that will be more beneficial for you and your money.
3. Your Earnings Will Be Easier to Anticipate You can choose from certificates of deposit with either fixed or variable interest rates. Both have their benefits, but one good thing about choosing a COD with a fixed rate is that your earnings will be much more predictable. Then, you'll know just how much interest your money will build, so you will be better able to plan for the future.
As you can see, a certificate of deposit through a reputable bank or other financial institution can be a much better option than a regular savings account. You'll be able to enjoy many of the benefits of a regular savings account, such as knowing that your money is safe and protected by the federal government, but you'll also be able to enjoy these three additional benefits. This can make a COD a great option if you are looking to save money for the future. Contact a company like Rio Grande Credit Union for more information.
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