Certificates of deposit (CDs) are a low-risk investment option that allows you to earn interest on your savings.
CDs are offered by banks and credit unions and come in different types that vary in terms of their interest rates, minimum deposits, and maturity dates.
Here are five types of certificates of deposit that can help you make money on your savings.
Traditional CDs are the most common type of certificate of deposit.
They typically have a fixed interest rate and a specific term, ranging from a few months to several years. The interest rate is usually higher than a regular savings account, and the longer the term, the higher the interest rate.
High-yield CDs offer a higher interest rate than traditional CDs. They require a higher minimum deposit and often have longer terms, which can range from several months to several years.
High-yield CDs can be a great option for those who are willing to commit to a longer-term investment for a higher return.
No-penalty CDs offer a unique feature where you can withdraw your money before the maturity date without incurring a penalty.
This type of CD usually offers a lower interest rate than traditional CDs. However, they can be a good option if you need to access your money before the end of the term.
Jumbo CDs require a high minimum deposit, often $100,000 or more. They offer higher interest rates than traditional CDs and can be a good option for those with a large sum of money to invest.
Jumbo CDs are a low-risk investment option and provide guaranteed returns, making them a popular choice for many investors.
Bump-up CDs allow you to request a higher interest rate if the rates increase during the term of your CD.
This type of CD typically has a lower starting interest rate than traditional CDs, but the ability to increase the rate can be a valuable feature in a rising interest rate environment.