You don’t need any more thrills from your investments. So, while Certificates of Deposit (CDs) aren’t the most exciting financial product in the world, that’s not necessarily a bad thing. They keep your money safe while earning a higher return than many checking or savings accounts.
CDs have been around forever. They’re pretty simple. You agree to deposit your money in the bank and not use it prior to the maturity date. This gives the bank a known source of funds that they can invest. In exchange for that stability, the bank is willing to pay you a higher rate of interest.
When you invest in a CD, you have limited liquidity. That is, you can’t get your money out before the term is up without paying a penalty. But in return, you earn attractive short-term returns that stay the same over the entire term of your investment. Best of all, your money is protected by FDIC insurance on up to $250,000 for an individual or $500,000 for a couple.
That basic structure hasn’t changed much since your parents (or even your grandparents) bought CDs. But at the end of the day, it’s pretty hard to find a better product for protecting, and growing, your savings. If it ain’t broke, don’t fix it.
Better Yields Than Most Savings Accounts
CDs like the High Yield CD from Battle Bank can offer better yields than a standard savings account, and even some high yield savings accounts. These investments come in a variety of term structures. You can buy a three-month CD, a one-year CD or even all the way up to a five-year CD.
The APY on a CD is fixed for the entire term. For example, if the yield is 5.0% when you buy it, it will be 5.0% throughout the term, regardless of what happens to interest rates. That’s different from most savings and money market accounts.
Banks can raise and lower your yield on savings and money market accounts at any time. Often banks get your business by offering a very high introductory yield, then cutting it back to almost nothing in a month or two. You can’t do that with a CD. The rate is the rate.
The longer the term, the higher the rate.
Safety First
With a CD, your money is kept safe and secure – you won’t lose your principal and when your term is up, you’ll get it back, and then some.
Why? These are not risky investments. But also because CDs are almost always covered by FDIC insurance. As long as your balance is under $250K (or $500K jointly if you’re married), the FDIC protects you from any losses.
Flexible Terms
Safety and high yields sound good, but what if you need your money? Leaving your money in a CD doesn’t have to mean putting it aside for years.
It’s true that you often can’t access your money before your CD matures without paying a fee. But with CDs available in maturities from three months to five years, it’s easy to structure your cash so that the amounts you need are always available when you need them. Got a balloon mortgage payment coming in two years? Buy a 2-year CD. Need money for quarterly tax payments? Choose a 3-month CD.
You can even ladder your CDs to take advantage of higher yields while still ensuring liquidity. For instance, if you deposit $10,000 in five-year CDs every year, each year, you’ll have a CD maturing to provide $10,000 plus interest in ready cash—and you get the benefit of the higher rates on long-term CDs.
CDs let you customize your savings in a way that works for you. And you always know what your yield will be. It won’t change no matter how long your money is parked.
Why Reinvent the Wheel?
CDs are boring. CDs are simple. CDs work really well. Why over complicate things when the simple solution will work?
Of course, not all CDs are the same. Some banks charge monthly fees just for owning a CD. Battle Bank High Yield CD accounts don’t do that. And some banks tack on sneaky hidden fees. Battle Bank lets you keep your money. It’s okay to be boring, but why not be smart about it?
The Beauty of Boring
CDs are never going to win prizes for complexity or cool features. What they will do is keep your money safe and protected while it grows.
The Battle Bank High Yield CD takes an old-fashioned financial product that Americans have relied on for decades to grow their savings and, well, doesn’t really change it that much. It’s a concept that has worked for over a century, and it works today, too, especially combined with a low-fee transparent structure that lets you make more money as a Battle Bank client.
