Depending on your savings goals, the benefits of CDs can be instrumental in helping you build a strong financial foundation.
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. You can close a CD before the term ends, but you typically will pay an early withdrawal penalty for doing so.
Both early withdrawal penalties and CD term restrictions can help bolster your savings discipline. You may think twice about withdrawing your funds if you incur a penalty, and with a CD you can predict your return at the end of any given term. These features also make CDs ideal for long-term savings goals. For instance, if you are looking to put away money for a child's college education costs, a CD might be a good place to park that money, because you know right when you’ll need it. Plus, Ally Bank offers a CD option made for the long-term goals in your financial life: the Raise Your Rate CD. With these CDs, you have the option of a one-time rate increase if our 2-Year CD rate goes up; you have the option to increase your rate twice (two times) if our 4-Year CD rate goes up.
Another benefit of CDs is the fact that CD interest rates are usually higher than those of regular savings or money market accounts. Depending on your financial institution and the term of your CD, you can find CDs that offer significant interest on your deposit.
When your CDs have reached maturity, you may cash them out and receive your initial deposit along with any earned interest. If you have several CDs in varying terms, you can ladder them over time for maximum earnings.
Ally Bank offers three kinds of CDs—our High Yield, No Penalty, and Raise Your Rate CDs—that come in a wide 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.