When we talk about financial health, there are different alternatives that can be part of our actions either to save or to invest.
One of those options is to apply for a certificate of deposit (CD). What is this? This is a special type of savings account offered by banks or credit unions. According to the Consumer Financial Protection Bureau (CFPB), a CD is also called a time deposit
.
More simply, a CD places money with the payment of a higher, fixed interest rate over a convenient period of time ranging from one month to five years. Most financial institutions require an initial deposit of $1,000. There are many benefits to applying for a CD. Here are some of the most important ones:
- They are easy to obtain or apply for. In a matter of minutes you can have a CD in a bank.
You can open a CD with a relatively small amount of money. There are institutions that allow you to do it with up to $1,000.
3. You choose and establish from day one the period of time or term you want to keep it.
4. You create a savings discipline for your financial life that will help you establish favorable behavior for your financial goals.
5. You have a conservative risk level and the interests are credited and computed every month.
6. It is your great ally to save because it has a maturity date that you can base on your priorities.
7. It becomes part of your financial history for future loan applications or banking transactions.
8. You design your future financial life and do not focus only on current or present savings.
9. Following this line, you can predict the income you will have as a result of the CD application. This in turn gives you the opportunity to project and visualize future income.
10. CDs offered by banks are insured (up to $250,000) by the Federal Deposit Insurance Corporation (FDIC).
These are some of the benefits of CDs. Based on your particular situation, this could be an alternative to successfully growing your financial life.
Are you ready to take the next step? Call us at 787.777.7777.
