3 Certificate of Deposit (CD) Terms you should know

CD Tips

October 2012

Certificates of deposit (CDs) can be the cornerstone of a solid financial portfolio, and understanding how CDs work is essential to making the most of your money. "CD terms" could either refer to the time it takes for CDs to mature or to words associated with CDs. In this article, we'll talk a bit about both ideas.

1. Maturity Date: Of all the CD terms you should know, this one is perhaps most important. It's the day when all the waiting pays off. CD terms can have a maturity date of anywhere from a day or two to several years. For example, a 5-year CD opened today has a maturity date 5 years from today. On this date, the account holder can transfer the funds, redeposit the funds into another CD or withdraw the amount.

2. Laddering: Laddering is also one of the important CD terms to know because it can be an effective way to maximize CD earnings while giving you access to a portion of your money. Rather than opening a single, large CD, you could open several and stagger the maturity dates over a longer period of time depending on when youll need the money. Then, as each one matures, you could withdraw money or roll the CD into another term CD — or a combination of both. Read our article on laddering for a more detailed explanation.

3. Penalties: The money you must pay to the bank, when you make a withdrawal on the CD before it has matured. This is called an "early withdrawal penalty." One way to avoid it is by opening the No Penalty CD from Ally Bank.

With interest rates that are consistently among the most competitive in the country and a variety of CD terms to suit your savings goals, Ally Bank can help you get started in just a few easy steps online. Explore your options at AllyBank.com today. Or if you want to talk with a live person, you can call our knowledgeable customer support team anytime, 24/7 at 877-247-ALLY (2559) today.

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