2. Benefits of CDs

If you’re absolutely sure you won’t need the money for the period to which you agree, there aren’t many negatives to opening a certificate of deposit. The higher the amount in the account and the longer the agreed-upon term, the higher the rate of interest the institution will pay. The interest rates on CDs are usually significantly higher than the interest rates for a standard savings account. The average annual percentage yield for a standard savings account is around 0.08 percent. For certificates of deposit, it is around 0.76 percent. Each additional year the money remains untouched in the account increases the interest dramatically. The Federal Deposit Insurance Corporation backs many financial institutions, which means any investment is insured for up to $250,000.

benefits of certificate of deposit

AndreyPopov / Getty Images


More on Facty


This site offers information designed for educational purposes only. The information on this Website is not intended to be comprehensive, nor does it constitute advice or our recommendation in any way. We attempt to ensure that the content is current and accurate but we do not guarantee its currency and accuracy. You should carry out your own research and/or seek your own advice before acting or relying on any of the information on this Website.