While some of the money management skills you need in life should be learned at an early age, some of us aren't as financially literate as we could be. Fortunately, it's never too late to introduce—or even reintroduce—the basics of saving to your family.
For some, starting with a goal in a 6-month time period is just long enough to connect short-term sacrifices to longer-term goals. For example, let's say you're planning a family vacation. Of course, you'll need to determine the amount you want to set aside. You want to earn the most interest you can while waiting out those six months. But are 6-month CDs the best solution?
6-Month CDs: The Pros
A 6-month CD can offer a great rate, plus, the early withdrawal penalty may be motivation to leave the money alone until you need it. The Ally Bank High Yield CD with a 6-month term offers among the most competitive rates in the country. Your growing balance can provide additional motivation to stay on track.
6-Month CDs: The Cons
Let's face it: 6-month CDs don't always pay the best annual percentage yield (APY) in the market. If you do find you need access to your funds during that time, the early withdrawal penalty can eat into your return and even your principal. In addition, you can’t add money to a CD the way you can to a savings account, for example.
6-Month CDs: It Doesn't Have to Be Either/Or
While you may not earn the same interest rate with 6-month CDs that you would with another option, there's no rule that says you have to choose one or the other.You could put your vacation airfare into a 6-month CD to make it harder to spend, and then use another savings option to add to your balance until you're ready to use it.
Regardless of the path you take, Ally Bank is here to help make it easy and rewarding to reach your savings goals. Learn more at Allybank.com or call live, 24/7 customer care at 877-247-ALLY (2559).
Ally Bank, member FDIC