Are Certificates of Deposit worth it?
A certificate of deposit is a low-risk time deposit that earns a fixed interest rate for a specified time period. In return, borrowers leave their money in the account until its maturity date. This type of account offers security, increased savings and flexibility in terms.
Certificates of deposit and savings accounts both focus on growing your savings, but they offer different advantages and disadvantages. To know if this type of investment is worth it requires an in-depth understanding of your current financial situation. Are you looking for fixed interest rates? Can you afford to set your funds aside until maturity? If so, this type of investment can certainly pay off over time.
Below are the pros and cons of CDs, in comparison to Savings accounts.
Advantages of a CD Account
||Disadvantages of a CD Account|
|Above average interest rates
||Early withdrawal penalty
|Fixed interest rate during term
||No accessibility until maturity
|No penalties if held until maturity
Advantages of a Savings Account
Disadvantages of a Savings Account
|Low or no account fees
||Potentially lower interest rates
||Limited number of monthly withdrawals|