Certificates of deposit (CDs) are considered by many to be a basic component of a solid savings plan. With CDs, a bank offers a certain interest rate in exchange for keeping your money on deposit for a set length of time. Since CDs sometimes offer a higher annual percentage yield (APY) than traditional savings accounts, the right CD may provide a good rate of return for your money.

Keep in mind that usually the longer the CD term length, the higher the APY offered. For this reason, it may be to your advantage to purchase a long-term CD, one that matures anywhere between 12 months and five years after the initial deposit. Not only could you benefit from a great rate, but you would also know what return to expect. Since CDs usually carry a penalty for early withdrawal, there's a built-in incentive to stay the course and receive your full return.

If you know you may need access to your funds, consider the Ally Bank No Penalty CD, which allows you to withdraw all your money, including interest earned, without penalty, any time after the first six days following the date you fund your CD.

For a savings strategy with both short- and long-term benefits, you may want to consider setting up a CD ladder. A CD ladder is a system that diversifies your money across CDs with varying maturity dates. For example, you might put 20 percent of your funds in five different CDs, each of which would have a different term length. If you chose CDs with term lengths of 12 months, two years, three years, four years and five years, for example, once the 12-month CD matured, you could then renew it in a new five-year CD. Following this process every year would result in a CD maturing every year, allowing you to take advantage of potentially higher long-term rates.

Whatever your savings plan, be sure to look beyond great rates on certificate of deposit products. Ally Bank CDs compound interest daily to help your money grow even faster. You can open and fund an Ally Bank CD with any amount, and your deposits are insured by the Federal Deposit Insurance Corporation (FDIC) up to the maximum allowed by law.

Explore your CD options; visit Allybank.com or call live, 24/7 customer care at 877-247-ALLY (2559) today.

Ally Bank, Member FDIC

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