Bank Certificates of Deposit (CDs) with TAB Bank

What is a Bank CD?

Before knowing whether or not a bank CD is right for you, you need to answer the question: What is a bank CD? Bank certificates of deposit known as “CD” for short, are issued when you invest your money for a specified length of time. The date at which your investment can be withdrawn is fixed when you open the account, and it’s known as the maturity date. You can invest in any denomination you wish above the minimum investment requirement.

When is a CD the right choice?

Knowing what your goals are is a very important piece of the puzzle when it comes to selecting the right bank account or investment account. A CD is a great choice for you if you are trying to:

• Save up for a specific event: If you are looking for an easy and secure way to store and grow a specific amount of money for a moderate amount of time, a CD is a great option for you. This could be money you have saved up for a luxury vacation, wedding, or a down payment on a new car. CDs are great because you have the power to choose the length of time you want your money to be deposited so, if your wedding is a year from now, you can set up a 12-month CD, grow your cash at a stable rate, and withdraw your money just in time for your wedding!
• Build your savings: CDs are a popular and secure way for you to build up your long-term savings! CDs typically have interest rates that are considerably higher than a standard savings account and, unlike stocks, many CDs are insured by the FDIC. This makes CDs a convenient low-risk investment strategy for savings you don’t plan to access during the given timeframe!

While CDs can serve many savings goals, they may not be the best for all situations. CDs are a fit over other financial options when you:

• Don’t need frequent or immediate access to your money: cash that is deposited into a CD account can only be accessed after the date of maturity, otherwise you may have to pay an early withdrawal fee and, in many cases, lose the interest your money had earned since the account was opened. This means that CDs are often not the best choice for an Emergency Fund or short-term savings. Instead, consider a High Yield Savings Account that will earn interest while still allowing you access to your money if you need it.
• Need access to your money within a few years (or prior to retirement): CDs are secure and the interest rate your deposit earns is typically locked during the period of time you determine at account opening. This relatively low risk means that the rates of return are often lower than what you could earn from other investment options, like stocks. If you are saving for retirement or have a long time horizon and want to earn higher returns, you might consider an IRA account or meet with a financial advisor to discuss other investment choices. However, if you have already reached retirement or know you will need access to your funds within a relatively short amount of time and want to prioritize stability over rate of return, CDs are a beneficial tool to consider.