How and Why a Certificate of Deposit Is a Sound Investment

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The Certificate of Deposit, or CD, is a common way people save money while making money. You don’t need a trove of cash to open a CD, and with financial discipline, you can safely squirrel away whatever you do have for modest returns later. If you are looking to expand your investments and deposit accounts, ask about a Certificate of Deposit.

What is a Certificate of Deposit (CD)?

Certificate of Deposits are considered one of the safest ways you can invest. The term ‘invest’ carries significant weight as it mulls around in your mind, but a CD is not the type of investment that bears significant risk and high gains. Think of a CD as the modest, disciplined cousin.
Your bank, whether brick and mortar or online, sells CDs. They are deposit products without the risk and without significant, risky returns. If you have a chunk of change you don’t need, or you don’t want to spend, you can set it aside for a certain amount of time. This is called the term. CD terms can be as little as 3 months or as long as 5 years.

Investing with a Certificate of Deposit

Why would you open a new CD account, for whom is the Unity® Gold E-CD ideal, and why should you choose it over a savings account? There are many questions to be asked, and one simple answer: You earn at a higher rate as you save, and you don’t have to worry about losing your investment. You can’t ask for anything more when selecting an investment product.

How a CD Earns Cash

In most cases the minimum cost to open a CD is $1,000, but you can go as high as more than $100,000. When you decide on a CD banking product, such as the E-CD, you speak to a banker about the term or duration you would like.

When choosing a term, you need to consider your needs, your goals, and your immediate access to cash-on-hand. You can choose to commit a little at a time with short-term CDs, you can save away for the long-haul with mid- and long-term CD rates, or you can do a mix of each. The term you choose affects what type of return you can expect while you own the E-CD. The lower the term, the lower the interest rate and APY. The more disciplined the term, the higher the return. A trick to finding a higher rate is to work with an online bank, because their rates are typically higher than brick-and-mortar banks.

Once you have your term(s) selected, and you write your check, your CD will start to earn money, but it does so differently than traditional savings accounts and money market accounts, earning daily interest instead of monthly compounded interest. Think about your job for a moment. Would you like to get paid more often during the month, or one time per month?

5 Benefits of Owning a CD

CDs are among the safest investments, as you earn money without the risk of losing money in the meantime. You always mature with at least what you started, they are safer for earning interest in the long-term. To sum it all up, here are the 5 benefits of making the switch or starting new with a CD:

  1. Certificates of deposit earn more annually than traditional savings and money market accounts earn.
  2. You can choose a CD that fits your needs and deposit availability. You can choose short-term, mid-term, long-term, or a combination of each.
  3. You can determine what you will earn and when you will earn it.
  4. CDs are FDIC insured for up to $250,000.
  5. Online banks offer the biggest returns.

If you are ready to maximize your savings potential, ask about opening a One United E-CD today.

OneUnited Bank

OneUnited Bank, the nation’s largest Black-owned bank and FDIC insured, understands we have to focus on money and technology to close the racial wealth gap. With your support, by simply opening and actively using a OneUnited Bank account, we will continue to accomplish our mission!

    I am very interested. Can you give me an example if I put $500 in a CD? Choose a couple of percentages and terms. Just curious. Thanks.
    September 2, 2016 Reply
  • Jeanette Smith
    Very interested in opening an account, don't have much money,I want to start out small and build from there. Thanks
    September 20, 2016 Reply
  • Jeanette Smith
    I think that CDs is a sound investment.
    September 20, 2016 Reply
  • Donald Heard
    I took a plunge and opened a certificate of deposit account... I couldn't feel more proud and excited for my financial future!! Great investment for the future.
    March 11, 2017 Reply
  • Lee Johnson
    Looking to open some for my kids. This would be one of the best gifts they ever received. Just the thought of watching their investment increase as they age while also teaching them that money isn't everything, but it is a great tool to have.
    September 12, 2017 Reply
  • Lillian Schaeffer
    Thanks for bringing to my attention that CDs are a good way to invest money without risking it. I haven't done any investing, but I really want to get started while I'm young so I can earn a lot of money over the years. I want to start with something that is pretty safe because I don't want to lose money on my first attempt. Since CDs are so safe with little risk, I think that's probably a pretty good place for me to start.
    May 23, 2018 Reply

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