CD Rates 101: How CDs Can Help Grow Your Money

Learn all about Certificates of Deposit (CDs) — how they work, their benefits, and why credit union CD rates are better.

Dreaming about a beach vacation? Hoping to buy a new car? Whatever your financial goals may be, we all want to see our hard-earned savings grow. But where can you earn solid returns without risky investments? 

Say hello to an old reliable friend — the Certificate of Deposit (CD). CDs offer a low-risk way to boost your cash through guaranteed interest over time. But not all accounts provide the same stability and growth. 

Understanding CD rates, terms, and how they work allows you to pick the perfect account to maximize your returns.

What Is a CD?Caricature of 2 people depositing coins into a piggy bank to save money

A Certificate of Deposit, or CD, is like a savings account on a timeline. You deposit money for a specific period of time, usually anywhere from 3 months to 5 years. In exchange, the bank pays you a guaranteed interest rate that's higher than a regular savings account.

The catch is that you can't withdraw the money until the CD's maturity date without facing penalties. So CDs are ideal for money you know you won't need access to any time soon. Your funds and interest rate are locked in for the full term, allowing your money to grow.

How CDs Work

Opening a CD is easy — just deposit your funds with the bank for the agreed term length. The bank will start calculating interest immediately, based on your account balance, the interest rate, and how frequently interest compounds.

Interest compounding makes your money grow faster since you earn interest on both your initial deposit and the interest that's already accrued over time. Compounding more frequently (daily, monthly, quarterly) results in higher returns.

While you can withdraw interest earned at any time, it's best to leave it in the CD to compound if you don't need it. Your original deposit remains locked up until maturity, but you can renew the CD for another term when it ends. Renewing may allow you to lock in a higher interest rate.

Benefits of Investing in CDsWoman sitting in driver's seat of a car

CDs offer a low-risk way to grow your savings with reliable returns. Here's what makes them a valuable addition to any investment portfolio:

  • Safety: Your money and interest earned are FDIC/NCUA insured. CDs provide growth without exposure to stock market volatility.
  • Predictable Returns: CD rates are fixed when you open them, so you know exactly how much interest you'll earn. This predictability is invaluable if you want to grow your savings in a stable, consistent way.
    • For example, you can use our CD earning calculator to estimate how the value of your certificate balance will grow over time! 
  • Diversification: Balancing CDs with other investments like stocks and bonds can reduce your overall risk while stabilizing returns.
  • Guaranteed Principal: As long as you hold a CD to maturity, you'll get back your initial deposit plus the guaranteed interest earned.

Get More From Your Savings With CCCU CCCU employee sitting at a desk talking with a customer

When it comes to savings, you want to keep more of what you earn. That's why at City & County Credit Union, we're committed to providing top-tier accounts without all the fees.

As a member-owned credit union, we pass profits back to you through:

  • Higher interest rates on savings and CDs
  • Lower or no fees compared to big banks
  • Personal support from financial experts who get to know your needs

Whether you choose one of our Certificate of Deposit terms ranging from 3 months to 5 years, or an account like our high yield savings, you can count on:

  • Flexible options to match your financial goals
  • No maintenance fees eating into your earnings
  • Guidance to maximize your savings dollars

At CCCU, we want to help you reach your financial goals faster by making sure your money works hard for you. Our team is here to provide personalized service and insight so you can pick the ideal accounts.