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Everything You Need to Know About Certificate of Deposit Accounts

November 3rd, 2022 | 7 min. read

Everything You Need to Know About Certificate of Deposit Accounts

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If you're considering what to do with your money and where to park it safely, you may want to look into getting a Certificate of Deposit Account, or CD.

what is a certificate of deposit or cd?bubble-savings-piggy-bank

A CD is a type of savings account that offers a higher interest rate than regular savings accounts. They work by having you deposit a certain amount of money into the account for a set period of time; after which, you can either withdraw your money without penalty or renew your CD for another fixed duration.

Here are all the necessary details about CDs so that way you know all of your saving options and can make an informed decision about what works best for you.


here's a quick view of what we'll cover


how does a certificate of deposit account work?

As I mentioned earlier, a CD is a specific type of savings account that offers a higher interest rate. The way it works is that you agree to deposit a certain amount of money (typically $500 - $1,000) into the account for a set period of time, also known as the CD's "term." The term is based on your personal choice and typically ranges from 6 months, up to 60 months, which can vary depending on the credit union or bank. Once that term is up, you can either withdraw your money without any penalties or renew your CD for another fixed duration.


popular types of certificate of deposits 

There are quite a few types of CDs that are offered. Here are the common types you are more that likely encounter.

Traditional CD

High-yield CD

Jumbo CD

No-penalty CD


Bump-up CD

Brokered CD


benefits and risks of having a certificate of deposit account



Despite these potential risks, many people still find certificates of deposit to be a relatively low-risk way to save and invest their money.


how do i open a certificate of deposit account?

You can open a CD at most banks and credit unions. To open an account, you'll need to meet the minimum deposit requirements, which can vary depending on the bank or credit union. Once you've met those requirements, you'll just need to fill out some paperwork and then your account will be open!


how do I choose a certificate of deposit account?

bubble-piggy-banks-blueWhen it comes to choosing a certificate of deposit (CD) account, there are a few things to keep in mind. First, you need to think about when you need the money you intend to deposit and how long you are willing to keep it locked up. CDs often offer higher interest rates than other types of savings accounts, but they also come with terms that limit when you can access your funds.


So if you know that you will need the money in the near future, then a CD might not be the best choice for you.

Another thing to consider is projections for the dividends your CDs will earn over time. Always do your research and look at multiple options so that you can get a sense of what kind of returns to expect from different CDs. This will help you make an informed decision about which CDs are worth investing in and which ones may not provide enough reward given the amount of time the funds will be locked down during the duration of the CDs term. By taking these considerations into account, you should be able to find a CD account that works for you and helps meet your investment goals.


how much does a certificate of deposit account cost?

There is usually no fee to open a CD account and CDs do not incur any fees to maintain the account, making them a cost-effective investment option. However, some banks or credit unions may charge a small fee if you withdraw your money before the CD matures. This is typically called an "early withdrawal penalty." If you like, think of the penalty fee as something designed to discourage investors from withdrawing their money before the end of the term. That way your money can continue to grow undisturbed and reach its full potential.


can a certificate of deposit accounts generate income?

Yes, CD accounts can generate income in the form of interest. The interest rate on a CD is generally fixed, which means it will not change for the duration of the CD's term. This makes them different from other investments, like stocks or bonds, which can fluctuate in value over time. Because of this, CDs are often considered to be low-risk investments. The higher the interest rate, the more interest you will earn over time. Additionally, the longer the term of the CD, the more interest you will accrue since your money will have more time to grow. Sounds like a nice benefit to me? what do you think?

what happens when a certificate of deposit matures?

When a CD matures, it means that the term has come to an end and you can now either withdraw your money or renew your CD for another fixed duration. If you choose to withdraw your money, you will typically be able to do so without any penalties. However, if you decide to renew your CD, you may be able to do so at the same interest rate or a higher one depending on market conditions at that time. 

are certificate of deposit accounts insured?

Yep! All deposits made at credit unions are insured by the National Credit Union Administration (NCUA) up to $250,000 per account. This includes both savings and checking accounts as well as certificates of deposit (CDs). bubble-umbrella-covering-change

So if your credit union ever fails, your deposits will still be safe and accessible. The same goes for banks. Their CDs are insured by the Federal Deposit Insurance Corporation (FDIC) for up to $250,000 per account. So regardless of which type of financial institution you choose, your deposits will always be protected.


how to avoid early withdrawal fees

Ok, I'm treading lightly with this one because the whole point of having a CD account is to save your money and let it grow so it ultimately benefits YOU! But if you think you'll need to do an early withdrawal, here's how to avoid a penalty.  Simply find a no-penalty CD account! 😁 Yes there are financial institutions that offer no-penalty CD accounts. They may be rare but they exist. Otherwise, my tip to you is - don't touch your money.

If you're looking for extra funds and think you'll be tempted to touch your savings - here's some steps that will help.

7 Steps to Building an Emergency Fund

ready to get your cd account?skyla-article-conclusion2

The bottom line is that CDs can be a great way to grow your money while minimizing risk. They can also be a good option if you're looking for a fixed interest rate and predictable returns. But before you open a CD, make sure to do your research and compare rates from different financial institutions. That way you can find an account that meets your needs and helps you reach your financial goals.

If you'd like to start with ours, here a look at Skyla's CDs and interest rates. Psst… you can calculate how much interest you could earn there too! 

Skyla's Certificate of Deposit

Once you've decided how much money you want to deposit, the term you want and the interest rate that will effect how much interest your money will earn over the selected term - you'll start to see your money grow.

Open Your Certificate of Deposit 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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Not Sure Where to Start? journey to help your money grow Step-1 learn where to get a savings account

Understand what a savings account is and where's the best place to get it. 

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Step-2 figure out which savings account is best

Determine which savings account will suite your financial needs best. 

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Step-3---Youre-Here learn about certificate of deposits

Learn how certificate of deposits earn higher interest than regular savings accounts.