In banking, CD is an acronym that stands for certificate of deposit (CD). It is a federally insured bank account that comes with fixed-rate earnings and a fixed-date of withdrawal, also known as the maturity rate. Once the maturity rate of a CD is reached, you can access your entire fund with the added earnings. A CD account works very similarly to a savings account but with more benefits and potential to save even more.


How Does a CD Account Save You Money?

CD accounts offer greater earnings than savings accounts because of the higher interest rates. So if you have a long term savings plan and are able to set aside funds, a CD would be an excellent option for you.

“CD rates are usually higher than a regular savings or money market accounts. The return is guaranteed.”

— Audrey Ewalt, Personal Banker for American Bank & Trust

A CD is a safe investment because you are guaranteed returns at a fixed rate for the length of your term. There’s little to no risk in opening one. “Confirm your financial institution is FDIC insured so your money is protected,” states Audrey. All American Bank & Trust CD accounts are federally insured by the FDIC up to at least $250,000. In addition to it being a low risk financial strategy, there is no setup or maintenance fees. The only possible penalty to keep in mind is if an early withdrawal is required. If you need to withdraw funds earlier than the maturity date, you could face fines for breaking the rules of your term.


What is the Term of a CD?

The duration of a CD is flexible based on what works best for you. With American Bank & Trust, our CD terms range from 91 days up to 5 years, paying higher rates on longer terms. It pays to plan ahead. The longer the period of time you set aside your CD, the more money you will eventually earn due to a higher interest rate. If you have short-term savings goals, then you may want to consider CD laddering. “A CD ladder is one way to plan for regular access to cash by taking money, dividing it into chunks, and buying several CDs for different terms,” states Audrey. “This allows you to have a cash flow on your terms in case of an unexpected emergency.” CD laddering is a smart way to deposit multiple funds. Each one will mature at varying periods of time, yielding you the payoff sooner.


Where to Begin When Opening a CD Account

At American Bank & Trust, we have an online account application to kick off the process at any time convenient for you. After applying, a bank representative will reach out to you to discuss your options. This conversation is an excellent time for discussing future savings goals to ensure your CD account meets your needs. CDs are a safe and reliable way to save money with flexible terms. Get in touch with a personal banker and find out if a CD is the right option for your savings plan!  


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