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Are CDs Safe?

June 9th, 2023 | 6 min. read

Are CDs Safe?

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Hey finance-savvy folks! Are you curious about whether Certificate of Deposit (CD) accounts are a safe bet? It's a common question for those who want to secure their hard-earned cash. Sure, CDs may not be the most thrilling investment on the market, but they offer an assurance of return and can add some diversity to your portfolio. 

Let's make finance fun and get the inside scoop on why CDs are a smart and safe investment choice. Are you ready to learn? Let's go!

here are key points we'll cover

Umbrella-Iconare cds a safe investment?

Yep! When it comes to safe investments, CDs are among the top choices. They are considered safe because they are insured by the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Share Insurance Fund (NCUSIF). That means that if the bank or credit union where you hold your CD goes out of business, you will receive your initial deposit, plus interest owed, up to a maximum insured limit of $250,000. 

QUICK TIP: Skyla is a federally chartered financial institution - regulated by the National Credit Union Administration (NCUA) - and is federally insured by the National Credit Union Share Insurance Fund (NCUSIF). Much like the FDIC for banks, the NCUSIF is backed by the full faith and credit of the U.S. government. And, like the FDIC, the NCUSIF insures each depositor up to $250,000.


In addition to the $250,000 coverage, Skyla members' deposits are insured up to $500,000 through the National Credit Union Administration (NCUA) and Excess Share Insurance Corporation (ESI)… at no additional cost to you! Get the details >


Rates-Icon---whitehow are cd rates determined? 

CD rates are primarily determined by the financial institution issuing the CD and prevailing market conditions. Banks and credit unions consider factors such as:

  • Their lending and borrowing needs, operating costs, and the competitive landscape when setting CD rates.
  • Additionally, CD rates are influenced by broader economic factors, including the federal funds rate set by the Federal Reserve, inflation expectations, and overall market demand for CDs. 

Typically, longer-term CDs offer higher interest rates, as financial institutions aim to incentivize customers to invest their money for extended periods.

However, it is essential to compare CD rates from different institutions to find the best available option, as banks and credit unions may offer varying rates based on their unique financial circumstances and objectives.


Add-Wallet-Iconcan you lose money in a cd? 

Nope! While CDs are generally considered safe investments, there is a risk of losing money, particularly if you need to withdraw your funds before the end of the CD term. Most CDs come with an early withdrawal penalty, meaning that you may forfeit some or all of your interest earnings if you withdraw your funds before the end of the term.



what are the risks and benefits of a cd?

  • CDs are safe when purchased through an NCUA or FDIC-insured credit union or bank. 
  • CDs offer a higher interest rate than regular savings accounts. 
  • No monthly maintenance fees. 
  • Have to wait to use to access funds.  
  • Your money will be inaccessible for a certain period of time.
  • Interest rate may not grow.

Here are more benefits and risks that come with a CD so that you can make an informed decision about what works best for you.

Everything You Need to Know About Certificate of Deposit Accounts


Savings-Icon-whiteare cds safer than savings accounts?

When it comes to safety, both CDs and savings accounts are considered safe investments because they are insured by the FDIC or NCUSIF. However, CDs generally offer higher interest rates than savings accounts, particularly if you are willing to lock in your money for a longer period of time.


ready to safely grow your savings with a cd?

CDs are a smart and safe investment choice for those looking to secure and grow their savings. With FDIC or NCUSIF insurance, account holders can feel confident knowing their initial deposit and interest earnings are protected up to $250,000 or more. CD rates are primarily determined by the issuing financial institution and prevailing market conditions, with longer-term CDs offering higher interest rates.

While CDs come with the risk of forfeiting some or all interest earnings if you withdraw early, they offer higher interest rates than savings accounts and have no monthly maintenance fees.

If you're ready to explore CD options, the next steps are to:

  • Research different financial institutions
  • Compare CD rates to find the best available option 
  • Once you've chosen an institution, you'll need to decide on the CD term and deposit amount that best fits your financial goals.

It's important to note that while CDs offer higher interest rates, your money will be inaccessible for the term you choose, so it's important to have a solid financial plan in place. With these considerations in mind, a CD account with a reliable financial institution can be a smart way to secure and grow your savings.

Want to learn more about how CDs compared to other savings accounts? 

How to Choose the Best Savings Account


If you have any questions, any of the wonderful staff at your local Skyla branch will be more than happy to help! Not near a branch or short on time? Then simply send us an email or give us a call at 704.375.0183. 




As the Content Specialist and author of the Learning & Guidance Center, Yanna enjoys motivating others by uncovering all that's possible in the world of finance. From financial tips and tricks to ultimate guides and comparison charts, she is obsessed with finding ways to help readers excel in their journey towards financial freedom.


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