5 Reasons to Put Your Money CDs in 2024

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When you’re saving money toward certain short- to medium-term financial goals, like planning for a vacation or car repair, for example, a certificate of deposit (CD) could be a great place to store your cash. CDs offer may benefits—like fixed interest rates—that you might miss out on if you keep your money in a regular savings or checking account. Below are five of the biggest benefits of saving money in a certificate of deposit.

Recommended CD Accounts

Account	1-Year APY	3-Year APY	5-Year APY	Learn More
CIT Bank Term Certificates of Deposit Open CD	0.30% More Info Annual Percentage Yield is accurate as of April 2, 2024. Interest rates for CIT Bank's term CDs are variable and subject to change at any time without notice	0.40% More Info Annual Percentage Yield is accurate as of April 2, 2024. Interest rates for CIT Bank's term CDs are variable and subject to change at any time without notice	0.50% More Info Annual Percentage Yield is accurate as of April 2, 2024. Interest rates for CIT Bank's term CDs are variable and subject to change at any time without notice	Open CD
Capital One 360 Certificates of Deposit Open CD	4.80%	4.00%	3.90%	Open CD
Marcus by Goldman Sachs High-Yield Certificates of Deposit Open CD	5.00%	4.15%	4.00%	Open CD
Discover Certificates of Deposit Open CD	4.70%	3.75%	3.75%	Open CD
Quontic Bank Certificates of Deposit Learn More	4.00%	3.25%	3.00%	Learn More

1. Higher Interest Rates

In some cases, CDs offer higher interest rates than other types of deposit accounts. The annual percentage yields (APYs) that banks offer on high-yield savings accounts and money market accounts often can’t keep up with the APYs available on CDs, though it's worth shopping around before you make your pick, as some online banks do offer very competitive APYs.

Below are the average interest rates that banks are offering on various types of deposit accounts as of April 2024 according to the Federal Deposit Insurance Corporation (FDIC).

Keep in mind that many of the best CD rates far exceed the national average. So, if you are interested in opening a CD to earn more interest on your savings, it’s important to comparison shop and see what the best online banks and other financial institutions have to offer. 

2. Guaranteed Returns

Another perk of saving money in CDs is that the returns you earn are virtually guaranteed. If you deposit $10,000 into a 1-year CD with a 4.75% APY, you’ll have $10,486 when your CD matures (assuming daily compounding interest). 

By comparison, you might be able to earn a higher return by investing your money in mutual funds or stocks. Long-term stock market investment has provided around 6%-7% returns when you subtract for the effects of inflation according to the Securities and Exchange Commission. But investing comes with a higher risk. While there’s a chance you could earn more on your investment, you could also lose more money as well. 

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3. Low Risk

If you open a CD with an FDIC-insured bank, you have protection in the event your financial institution fails. The FDIC protects depositors for up to $250,000 (per insured bank, per account ownership category). Online banks are just as safe as traditional banks as long as they are members of the FDIC. You can receive a similar insurance for your deposits if you open a CD at a credit union provided it's a member of the National Credit Union Administration so your deposits are insured. 

FDIC insurance on your CDs and other types of deposit accounts only goes up to $250,000 per bank and per account type. So it’s wise to consider opening multiple accounts at different financial institutions if you have deposits that exceed this amount. 

A high-yield savings account can be a nice alternative, and to help you compare options, we've rounded up some of our top picks.

Recommended High-Yield Savings Accounts

Bank Account	APY	Features	Learn More
BrioDirect High-Yield Savings Account Open Account	4.85% More Info *Annual Percentage Yield (APY) is variable and is accurate as of 11/15/2024. Rate is subject to certain terms and conditions. You must deposit at least $5,000 to open your account and maintain $25 to earn the disclosed APY. Rate and APY may change at any time. Fees may reduce earnings.	$5,000 min. deposit No monthly fee	Open Account
Axos ONE® Savings and Checking Bundle Open Account	Up to 4.86% More Info Earn up to 4.86% APY on savings, and 0.51% APY on checking when you meet requirements.	No minimum deposit No monthly fee	Open Account
SoFi Checking and Savings Open Account Member FDIC Member FDIC	0.50% - 4.00% More Info SoFi members with Direct Deposit or $5,000 or more in Qualifying Deposits during the 30-Day Evaluation Period can earn 4.00% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. Members without either Direct Deposit or Qualifying Deposits, during the 30-Day Evaluation Period will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Only SoFi members with direct deposit are eligible for other SoFi Plus benefits. Interest rates are variable and subject to change at any time. These rates are current as of 12/3/24. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet.	No minimum deposit No monthly fee	Open Account
CIT Bank Platinum Savings Account Open Account	4.55% More Info Earn 4.55% APY on balances over $5,000. Balances of less than $5,000 earn 0.25% APY. Annual Percentage Yield is accurate as of November 13, 2024. Interest rates for the Platinum Savings account are variable and subject to change at any time without notice.	$100 minimum deposit No monthly fee	Open Account

4. Avoid Fees

Some banks charge fees to maintain different types of deposit accounts like checking accounts and savings accounts, but it’s common for CDs to feature zero or low fees. Monthly maintenance fees can eat into your potential earnings. So, CDs can be a great, fee-free way to grow your savings without having to waste any of your money on these expenses. 

5. Multiple Maturity Dates

When you open a CD, you agree to leave your cash in the account for a fixed period of time. In exchange, the bank pays you a fixed interest rate that’s typically higher than you’d receive on a traditional savings account. But rates can vary based on how long you agree to leave your cash deposit in the bank, also known as the CD’s term. In some cases, a bank may offer a higher interest rate on a long-term CD vs. a short-term CD But it's also not unusual for 1-year CD rates to outperform CDs with lengthier terms. 

The good news is you can often find CD terms ranging from a few months to several years. You can even consider building a CD ladder to spread your cash among multiple CDs with different maturity dates. This approach can allow you to access your money more frequently in case interest rates increase or you want to use your cash for another purpose. 

CIT Bank Term Certificates of Deposit

Open CD

Member FDIC

• Our Rating 3.5/5 How our ratings work
• Minimum
  Deposit Required$1,000
• 1 Year APY0.30% More Info

  Annual Percentage Yield is accurate as of April 2, 2024. Interest rates for CIT Bank's term CDs are variable and subject to change at any time without notice

• 3 Year APY0.40% More Info

  Annual Percentage Yield is accurate as of April 2, 2024. Interest rates for CIT Bank's term CDs are variable and subject to change at any time without notice

• 13-Month APY3.50% More Info

  Annual Percentage Yield is accurate as of April 2, 2024. Interest rates for CIT Bank's term CDs are variable and subject to change at any time without notice

Many banks that offer CDs require customers to commit to lengthy terms of several years or more in order to earn the highest interest rates available. However, with CIT Bank's term CDs, the opposite is true. To get the best rates at CIT, you'll need to open one of its shorter-term CDs, such as its 13-month CD that pays 3.50% APY. If you want an easy way to save more money without having to wait years, CIT Bank's term CDs are a solid option.

• Overview
• Pros & Cons

Overview

If you’re looking for a dependable way to earn interest on your money in the short term, CIT Bank’s certificates of deposits may be an excellent choice for you. However, those looking to open a long-term CD may be better off looking elsewhere.

Pros

• Strong rates for 13- and 18-month terms
• FDIC insured

Cons

• Rates for longer terms unimpressive

Potential Drawbacks of Saving With CDs

Before you open a CD, consider the possible downsides of using this type of account to grow your savings:

• CDs offer less flexibility: If you need to access your cash before the maturity date on your account, you could have to pay an early withdrawal penalty. 
• Interest rates might not keep up with economic changes: If you lock in a rate on a long-term CD and interest rates start trending upward, you might lose out on a higher APY. But the flipside is that when rates drop, if you have funds set aside in a CD with a high fixed rate, it could really pay off.

Bottom Line

There’s no such thing as a perfect solution for everyone, and that includes CDs. Yet CDs can offer plenty of perks that could make them a great fit if you’re interested in a low-risk option to grow your short- and medium-term cash savings at a faster rate.