CDs are time deposits. When you open a CD, you agree that you will not withdraw the funds until the maturity date, which could be anywhere from a few months to several years after you open the account, depending on the term you choose.
How can CDs be useful and how do they work? Here are answers to 3 common CD questions.
- What’s the difference between a CD and savings account? Generally, CDs offer higher interest rates than savings accounts. Most CDs also have fixed terms, meaning you usually can’t withdraw money from the CD until it matures without paying a penalty. Savings accounts do not have fixed terms and usually pay variable interest rates. Deciding to put money into a savings account or CD often boils down to whether you’re looking for higher interest rates or easier access to your money.
- When can I take money out of a CD? You can take money out of a CD at any time, but if you withdraw from the CD before it has matured you may pay an early withdrawal penalty. For example, a CD with a one-year term will mature after one-year. However, Ally Bank’s No Penalty CD allows you to withdraw all your money, including interest earned, without any penalty, any time after the first six days following the date you fund your account.
- Can I Get More Than One CD? Yes. You can open multiple CDs at any time. In fact, opening multiple CDs with different maturity dates is a strategy called CD laddering. This can be an effective savings strategy that keeps some of your money in long-term, high interest CDs, while also giving you regular access to your money as shorter-term CDs mature.
Ally Bank offers a variety of CDs, including our High Yield CD, No Penalty CD and Raise Your Rate CD, all at some of the most competitive rates in the country. Learn more by visiting Allybank.com or call live, 24/7 customer care at 877-247-ALLY (2559) today.
Ally Bank, Member FDIC