Find New Ways to Save

Certificate of Deposit: How to Grow Your Money

October 2012

A certificate of deposit (CD) is a low-risk way to grow your money. You may want to shop around for different CD products at a variety of banks in order to find CDs that work for you. Focusing on online banks like Ally Bank is a good place to start because many have lower overhead costs and can usually offer better rates than their traditional counterparts.

Even a slight bump in interest rate — like the one you may get with an Ally Bank Raise Your Rate CD — will lead to higher earnings, so finding the best possible rate is important. It is equally as important to ensure that the bank's deposits are insured by the Federal Deposit Insurance Corporation (FDIC). At Ally Bank, your deposits are always insured to the maximum allowed by law.

It's also smart to look into CDs with different maturity dates. Generally, the longer the term on the CD, the better interest rate you will receive while you grow your money. It may also be important that you find a CD that will allow you to withdraw your money without early withdrawal penalties. Ally Bank offers a No Penalty CD that allows you to withdraw the funds, plus earned interest, without an early withdrawal penalty, any time after the first six days of your deposit.

Another one of the CD tips that could be used to maximize earnings would be to set up a CD ladder. A CD ladder is a system that diversifies your money across different CDs with varying maturity lengths. For example, you might put 20 percent of your funds in five different CDs, each of which would have a different maturity length. For example, you could choose 12 months, 2 years, 3 years, 4 years and 5 years.

Once the 12-month CD matures, you could then renew it in a new 5 year CD. Continuing to follow this process every year will result in you having a new CD mature every year, and it will allow you to take advantage of the potentially higher long-term rates. Of course, it's just one example of building a CD ladder. You can consult a financial advisor and adjust the strategy to fit your own needs.

With rates that are consistently among the most competitive in the country, Ally Bank CDs can be opened and funded with any amount. Take a look at the great benefits they have to offer, and start building your strong savings foundation today. To learn more call our live 24/7 customer support line at 877-247-ALLY (2559) or visit

High Yield CD

No Penalty CD

Raise Your Rate CD

Related articles: