Making More Money Faster with CDs: Tips for Capitalizing on Your Savings Potential

Certificates of deposit (CDs) are a great way to capitalize on your savings potential and make more money faster. CDs offer a fixed and higher interest rate than a typical savings account, and the rates currently offered by some financial institutions are more than 4%.^[0] However, it's important to understand the terms of the agreement before opening one as the money will be locked in for a predetermined amount of time.

CDs offered by the bank have no monthly maintenance fees and can be obtained for terms ranging from three months up to 10 years.^[1] The greater the amount of money invested, the higher the APY generated, which is a common feature of CDs.^[1] It must be noted, however, that a substantial amount of money is needed to open a CD account: at least $2,500 for the initial deposit.^[1] Furthermore, there are no branches available.^[1]

Minimum deposit amounts may vary, with some banks requiring a $1,000 minimum deposit, while others may offer no minimum deposits.^[2] Depending on when you need to access your money, CDs have early withdrawal penalties, while savings accounts do not. You can also continuously add money to your savings account, whereas most CDs do not allow additional deposits after opening an account.^[3]

For a non-online-only account, Barclays Bank CDs are available in terms ranging from 12 to 60 months.^[1] The interest rate for 12-month CDs is different from that for 60-month CDs.^[1] There are also liquid CDs available that offer more flexibility and allow for withdrawals before the maturation date of the savings plan without a penalty, but the interest rate for a no-penalty CD will be a bit lower than a traditional CD.

It's also a good idea to consider CD laddering if you don't want to deposit all your money in a particular CD.^[4] With a CD ladder, you'll open multiple CDs of different terms and split your money between the CDs.^[3] For example, you can open a 3-month, 1-year, and 5-year CD and stagger the terms and deposits so that you can have access to some of the money sooner and avoid getting stuck in one long-term CD if interest rates begin to rise.^[1]

Ultimately, CDs are a great way to capitalize on your savings potential and make more money faster. However, before making any investment, doing research and even speaking to a financial advisor is always a good idea.^[5]

0. “Best 3-Year CD Rates for February 2023” GOBankingRates, 8 Feb. 2023, https://www.gobankingrates.com/banking/cd-rates/3-year-cd-rate/

1. “Best CD Accounts of February 2023” GOBankingRates, 7 Feb. 2023, https://www.gobankingrates.com/banking/cd-rates/best-cd-rates/

2. “BMO Harris CD Rates February 2023 – Forbes Advisor” Forbes, 14 Feb. 2023, https://www.forbes.com/advisor/banking/cds/bmo-harris-cd-rates/

3. “The Best 3-Month CD Rates of February 2023” Business Insider, 10 Feb. 2023, https://www.businessinsider.com/personal-finance/best-3-month-cd-rates

4. “‘You may want to think about a CD.' Some CDs pay 4.5% or more right now. Should you get one?” MarketWatch, 10 Feb. 2023, https://www.marketwatch.com/picks/you-may-want-to-think-about-a-cd-some-cds-pay-4-5-or-more-right-now-should-you-get-one-01675975850

5. “CD Rates Today: Feb. 13 — 6 Month Term Bounces Back to 4.5% APY” GOBankingRates, 13 Feb. 2023, https://www.gobankingrates.com/banking/cd-rates/cd-rates-today-feb-13-2023/