Are There Any Drawbacks in Getting Certificates of Deposit?
Certificate of Deposit Disadvantages
Saving money for the future is a great idea, but there are some things you should consider before opening a certificate of deposit (CD). A CD from an FDIC-member bank like Ally Bank is one of the best ways to save money for the future. Your money is insured up to the maximum allowed by law, and the interest rate can be significantly higher than that of a regular savings account. Sometimes, however, there are two features with CDs that some see as certificate of deposit disadvantages, so it helps to know what you're getting into.
First, a CD is different from a regular savings account - CDs are structured so that the funds remain in the account during the CD's term. If you withdraw from a CD before the term ends, you may incur early withdrawal penalties. One exception to this is the Ally Bank No Penalty CD, which gives you a competitive interest rate and the ability to withdraw the money - including earned interest - any time after the first 6 days of funding your account.
As far as certificate of deposit "disadvantages" go, it's ultimately about what works for you and your goals, so if an early withdrawal is even a remote possibility, it might make more sense for you to save money in a different way.
At Ally Bank we make it easy - our CD products have straightforward terms and earn competitive rates, as published by Bankrate.com
Overall, a CD can be an excellent way to protect your money and build your savings faster than with a regular savings account. Look into your options, including these straightforward CDs from Ally Bank:
- High Yield CD
- No Penalty CD
- Raise Your Rate CD
Learn more at allybank.com or call live, 24/7 customer service at 877-247-ALLY (2559) today.