As savings tools, certificates of deposit (CDs) and bonds offer different benefits. Knowing the differences can help you choose the account that best meets your financial needs.

A CD is a time deposit. When you open a CD, you agree that you will not withdraw the funds until the maturity date, which varies from a few months to several years after you open the account, depending on the term you choose. If you decide to withdraw the money before the term is up (maturity), you may have to pay an early withdrawal penalty. Generally, the longer the CD term, the higher the interest rate. CDs are traditionally opened with banks or other financial institutions. CDs from FDIC-member banks are insured by the Federal Deposit Insurance Corporation (FDIC) up to the maximum allowed by law.

A bond is a debt security in which an investor loans money to an institution that borrows the funds for a defined period of time at a fixed rate. The institution may be a financial institution, a private company, a publicly traded corporation, a municipal government, or even the federal government. In exchange for the purchase, the institution promises the holder a certain interest rate. Interest may be paid periodically, reinvested or paid at the maturity date. Bonds may be obtained directly from the issuer, or from a dealer. Rating agencies assign a risk factor for most bonds issued; usually a higher-risk bond will offer higher interest rates. Bonds are not FDIC-insured.

Which types of savings products will work best for you depends on your own financial goals. It's a good idea to consult with a financial advisor familiar with your situation for guidance.

The Ally Bank advantage
At Ally bank, we are committed to making saving as easy, secure and rewarding as it can be. You can open and fund any CD with any amount and all your deposits are insured by the FDIC up to the maximum amount allowed by law. With Ally Bank CDs you earn among the most competitive interest rates in the country, all backed by the Ally Bank Ten Day Best Rate Guarantee. Learn more about our High Yield CD, No Penalty CD, and Raise Your Rate CD by visiting or call live, 24/7 customer care at 877-247-ALLY (2559) today.

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