Are you looking for a straightforward way to save and grow your money? When you want to lock in a guaranteed return, especially in a time of market volatility, a CD can be a great choice.
What’s a Certificate of Deposit?
A Certificate of Deposit, also called a CD, is a type of savings account that lets you earn a higher, fixed interest rate than a regular savings account.
In return, you commit to leaving your money in the account for a set period, known as the “term.”
When you open a CD, you choose a term length, which could be as short as a few months or as long as several years. Your interest rate typically depends on which term length you choose, with higher interest rates usually offered for longer terms.
Opening a CD is pretty simple: you deposit a lump sum, and INB holds onto it for the term length you selected.
Interest will start accruing on the business day you deposit and will earn at the rate specified when you opened the CD. The interest rate and annual percentage yield will not change for the term of the account, and your interest will be compounded and credited annually.
When the term ends, you’ve reached what’s called the “maturity date.” At that point, you can withdraw your original deposit along with the interest it’s earned, or you can roll it into a new CD for another term.
Benefits of a CD
Why should you consider opening a CD? Here are a few good reasons:
- Safe investing: CDs are insured by the FDIC (Federal Deposit Insurance Corporation) up to $250,000. Since your money is protected even if something happens to the bank, it’s a low-risk way to save.
- Higher interest rates:CDs typically offer better interest rates compared to traditional savings accounts. Essentially, the bank rewards you with more interest for leaving your money untouched for a specific period of time. (And since your money is “locked away,” you also won’t be tempted to use it!)
- Fixed returns:Unlike stock investments that can fluctuate, CDs provide a fixed interest rate. This means you know exactly how much your money will grow by the end of the term.
Be sure to keep in mind…
One drawback to CDs is they are less flexible than other savings options.
Why? If you withdraw your money before the maturity date, you’ll be subject to an early withdrawal penalty. This fee will likely eat into the interest you’ve earned, or even dip into your principal.
So, CDs are a great option only if you’re confident you won’t need access to that money during the term.
How to Open a CD at INB
You can apply for CDs online or stop by any INB branch.
Questions? We’re happy to answer them! Give us a call at 1-877-771-2316.