Setting your own financial goals can help you focus your spending and inspire you to ramp up your savings. Many bank products are out there to help you reach your goals, and certificates of deposit (CDs) are a common favorite.
CDs are time deposits. 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. You can close a CD before the term ends, but you typically will pay an early withdrawal penalty for doing so.
This can be very helpful for people who are looking to bolster their savings discipline. For example, it can be tempting to dip into a savings account and borrow from your vacation fund. But with a CD, that temptation may be minimized thanks to a potential penalty that could eat into your earned interest. In addition, some banks may reward your discipline by paying you more interest on a CD than you might have received in a savings account.
For your longer-term financial goals, it might be smart to think about laddering your CDs. This strategy involves depositing your funds in CDs of varying lengths, creating what is known as a CD ladder, so that your money becomes available in stages. Evening if laddering CDs isn't right for you, renewing your savings and earned interest into another CD might be a good way to help you reach your financial goals.
Ally Bank offers three kinds of CDs—High Yield, No Penalty, and Raise Your Rate CDs—all of which offer competitive rates and come in a range of terms to suit just about any savings plan. Learn more by visiting Allybank.com or call live, 24/7 customer care at 877-247-ALLY (2559) today.
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