Pros and Cons of Certificates of Deposit
CD Pros and Cons
Considering a certificate of deposit (CD)as a savings option? As with any financial decision, you should weigh the pros and cons of CDs before you open an account. A CD is an easy, sensible way of saving money and earning interest. You'll find CD products at banks or credit unions. Online banks often offer some of the best options and highest CD rates.
Let's start with a CD’s primary advantage: security. The Federal Deposit Insurance Corporation (FDIC) insures deposits at member banks like Ally Bank up to the maximum amount allowed by the law. Another advantage of CDs is that they often offer fixed rates for fixed terms. With that information, you can accurately estimate your earnings and make planning for the future that much easier. CDs earn steady interest often at a higher rate than most regular savings accounts. They can be a great way to diversify beyond the savings account you may already have, or an excellent alternative to such an account, depending on your needs.
Although CDs usually offer higher interest rates than savings accounts, the highest rates typically come with the longest deposit terms. And, most CDs have early withdrawal penalties if you withdraw your funds before the CD matures. One exception is the Ally Bank 11-month No Penalty CD, which allows you to withdraw all your money, including interest earned, without any penalty, any time after the first six days following the date you fund your account.
Ally Bank offers CDs in a wide range of terms to help you reach your savings goals. There’s no minimum deposit to open and all of our CDs are backed by the Ally Bank Ten Day Best Rate Guarantee. Whether you're interested in our High Yield CD, No Penalty CD or Raise Your Rate CD, you’ll get rates that are among the most competitive in the country and customer service that makes managing your CDs as simple as possible. Learn more at Allybank.com or call live, 24/7 customer care at 877-247-ALLY (2559) today.