Putting away money in a certificate of deposit, or CD, can be something that people may be uncomfortable with. You are essentially handing over a large sum of money to a bank or credit union and you lose access to that money for a period of time. However, this isn’t a risky investment for you. Continue reading below to learn why.
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| Service Credit Union | 4.50% APY 6-Month CD | Review |
| Western Alliance Bank | 4.50% APY 3-Month CD | Review |
| Western Alliance Bank | 4.40% APY 6-Month CD | Review |
| Rising Bank | 4.35% APY 6-Month CD | Review |
| First Tech Federal Credit Union | 4.35% APY 13-Month Share Certificate | Review |
| Live Oak Bank | 4.30% APY 12-Month CD | Review |
| Live Oak Bank | 4.30% APY 12-Month Business CD | Review |
| Alliant Credit Union | 4.30% APY 12-Month Certificate | Review |
| Rising Bank | 4.25% APY 12-Month CD | Review |
| Quontic Bank | Up to 4.25% APY CD | Review |
| Western Alliance Bank | 4.25% APY 12-Month CD | Review |
| Ponce Bank | 4.20% APY 4-Month No-Penalty CD | Review |
| Discover Bank | 4.10% APY 24-Month CD | Review |
| First Mid Bank & Trust | 4.08% APY 9-Month CD | Review |
| Sallie Mae | 4.00% APY 14-Month CD | Review |
| Sun Canyon Bank | 3.98% APY 11-Month CD | Review |
| Sallie Mae | 3.95% APY 10-Month CD | Review |
| Western Alliance Bank | 3.85% APY 5-Month CD | Review |
| GreenState Credit Union | 3.80% APY 10-Month CD | Review |
| Blue Federal Credit Union | 3.75% APY 9-Month No Penalty CD | Review |
| Blue Federal Credit Union | 3.75% APY 15-Month CD | Review |
| CIT Bank | 3.50% APY 13-Month CD | Review |
| CIT Bank | 3.50% APY 11-Month No-Penalty CD | Review |
| Southwestern National Bank | 3.40% APY 8-Month CD | Review |
| First Financial Northwest Bank | 3.00% APY 12-Month CD | Review |
| Ponce Bank | 3.00% APY 1-Month High Yield CD | Review |
| CIT Bank | 3.00% APY 6-Month CD | Review |
| CIT Bank | 3.00% APY 18-Month CD | Review |
Federal Insurance Keeps CDs Safe
The straight forward answer to the question is yes, it is safe to put your money into a CD. It’s quite similar to many other bank account options offered by financial institutions. CDs are actually federally insured at banks and credit unions that are members of a federal deposit insurance agency. This means that if a member bank or credit union fails, you are guaranteed to get your money back up to $250,000.
There are generally two agencies that will insure a financial institution. The Federal Deposit Insurance Corp. (FDIC) insures banks while the National Credit Union Administration (NCUA) insures credit unions. You don’t have to pay any fee or apply for this insurance. The bank or credit union that you decide to bank with will be paying for this on behalf of their customers.
Most of the time, finanical institutions are federally insured, but rarely there are few that aren’t. An easy way to check if they are or not is to check the bottom of their website and see if the acronyms FDIC or NCUA is present. Additionally, you can always use the FDIC’s BankFind tool or the NCUA’s Credit Union Locator widget.
How Safe Are Online CDs?
They are going to be as safe as any other CD that you can get at your local bank or credit union. Most online banks offer FDIC insurance. The main difference between a traditional bank and an online bank is that there is a difference in customer support. Since an online bank don’t have physical locations, you won’t be able to get in person support.
Although you may not recognize the best online CD providers, that doesn’t mean they aren’t safe. In some instances, that online bank may be a part of a larger bank’s network. An example of this would be Citizens Access is simply an online division of Citizens Bank.
Tips For Using CDs
Here’s a quick rundown of things to keep in mind before you open a CD.
Call customer support. This lets you see how quickly you can speak to a real person. Also, you will be able to determine if help is available around the clock or only certain hours of the week.
CDs don’t allow additional contributions. With a CD, you must make a large deposit upfront. Once you do so, you won’t be able to add any more funds into the account.
Keep an eye on your CD’s maturity date and grace period. CDs have small windows in which you can withdraw or add more funds before the term expires.
Make sure your deposit is insured. As mentioned above, most credit unions and banks are federally insured, so you’ll be able to get your money back, up to a certain amount, if the bank were to fail. Still, this doesn’t mean all financial institutions are backed, so do your research.
Save the paperwork from opening your CD. Nowadays, banks don’t issue a physical certificate. If you’re the type to have a physical copy, you can always ask your bank or print it out if you opened a CD with an online bank.
If you inherit or rediscover an old CD, call your bank to see if it’s still active. If the bank does not have records of the CD, you can always check the FDIC resource of the unclaimed property division in the state that the account was initially opened. Banks are required to eventually send inactive CDs to the state government, where they end up on the list.
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Bottom Line
CDs are great ways to invest money you don’t need right away into something that could benefit you. Since most banks and credit unions are federally insured by their respective agencies, investing in a CD is safe because you can get your money back if the financial institution were to fail. Just keep in mind that they must state that they are backed by those federal agencies. For more posts like this, check out our list of bank guides!
