Benefits of Certificates of Deposit (CDs)
Certificates of deposit, also known as CDs, are a type of deposit account offered by banks and credit unions. CDs allow you to earn interest on your money like other deposit accounts, such as a savings account, but there are some key aspects that make CDs unique. Notably, CDs tend to offer among the highest available interest rates of all banking deposit products.
Unlike savings accounts or money market accounts, you can deposit a set amount of money into your CD account and commit to leaving your money there for a fixed period of time. Terms may last as little as three months, or as long as five years (60 months) or even longer. In return, you'll earn a fixed amount of interest based on a predetermined interest rate. The rate of a CD typically does not change during the term, which is why you may see the product called a fixed-term CD. Another type of CD is a no-penalty CD, which gives the owner more flexibility to withdraw funds before the CD's maturity date.
When the CD term is up — when the product has reached maturity — you’ll be able to withdraw your original balance plus any interest earned, or opt to rollover all or part of those proceeds into a new CD with a new term. A key benefit of opening a CD is you’ll know exactly how much of a return you’ll receive when your money is ready to withdraw at the maturity date you selected.
CD Accounts vs. High-Yield Savings Accounts
Tips for Using Certificates of Deposit
There are a host of advantages to leveraging certificates of deposit (CDs) to boost your savings. You are likely to earn more interest with a CD compared to that of a competitive high-yield savings account. Plus, the interest rate you earn for the duration of the CD term won’t fluctuate over time. And you can pick a term to fit your needs. This feature allows you to structure CDs in sequences, such as the CD ladder, which provides periodic access to savings while tapping the highest available interest rates of the longest-term products.
Click the button to read more about how to maximize your savings with CDs.
More About CD Accounts
What Is a Certificate of Deposit Account?
A CD account offers savers a way to lock in a strong and predictable rate of return on their cash deposits. CD (short for “certificate of deposit”) accounts are interest-bearing deposit products most commonly offered by banks. (Credit unions may offer a similar product under the names “share certificate” or “certificate.”) A CD account’s rate won’t change over the time period it lasts, known as the term. For instance, a 12-month CD will pay the same interest rate in the first month as it does in the twelfth month. This is in contrast to most savings accounts, where the rate may be subject to change. Many savers like this stable, guaranteed return offered by CD accounts. Plus, CD accounts (often simply called “CDs”) appeal to savers because of their elevated interest rates in comparison to other categories of savings products.
But there is a notable tradeoff savers must consider before tapping CD accounts and, in turn, their more muscular rates: generally, you are discouraged from accessing the funds in a CD account until it matures, which happens when it reaches the end of its term length. There might be a penalty fee incurred if you have to withdraw funds from a CD account prior to its maturity date. Check the product terms of a CD to better understand what would happen in the event you had to make an early withdrawal from it.
CDs are a very safe, very low-risk vehicle for earning passive income. They’re low-risk in part because CD accounts held at FDIC member banks, as well as certificates held at credit unions backed by the NCUA, offer savers the protection of federal deposit insurance. Deposits in a CD account are insured against loss up to the applicable legal limit. You just don’t get that level of security from other types of investments, such as stocks or ETFs, which may lose value. For cash reserves you may not need access to for a while, a CD account is a great way in which to put that money to work without taking on much if any risk.
CD Account Rates
Interest rates on CD accounts, and dividend rates on credit union certificates, generally well exceed what financial institutions offer for liquid cash accounts like checking and savings accounts. For the opportunity to hold your funds for longer, predictable, uninterrupted spans of time, banks are willing to pay a premium in interest and credit unions are willing to issue a higher dividend.
CD accounts come in a wide range of term lengths and, typically, the longer a CD’s term, the higher the interest rate. Here’s an illustration of that: on a monthly basis the FDIC tracks the average rates offered for a range of bank products, and in a recent set of published findings there was a 7x difference in the average rate comparing a 1-month CD to a 12-month CD (0.03% vs 0.21%). In this scenario, the patience to lock away cash for 11 additional months yields seven times the financial benefit.
You can find banks offering CD accounts with relatively quick maturities (e.g., three months), all the way up to terms that last 5 or more years. Many savvy savers choose to buy CDs at a range of maturities so as to balance the competing needs to tap the highest yield and retain access to funds.
How Does a CD Account Work?
A CD account works like this: you make a one-time, lump-sum deposit to open the account. You won’t be able to add more funds to the CD once it’s been established, so it’s best to fund a CD with the full amount of principal cash you wish to save at the outset of the account. A CD account will have a specific term length, like 12 months. Oftentimes, banks will have a range of options to choose from when it comes to the duration of a CD, or, in the case of credit unions, the duration of a certificate. Over the course of the term, your deposit is effectively locked in; you earn a steady return based on the CD or certificate’s rate, however the funds — both principal and any accrued earnings — are typically not accessible.
In general, it’s only when the CD reaches maturity that you can freely access the combined principal and earnings without penalty. At maturity, CDs can be rolled over, which means the account is restarted for another term and locked in at whatever is the current advertised rate (which could be different from before). You can opt to change your investment — for example, switch from a 12- to a 60-month CD, redepositing all or part of your cash — or simply pocket the original CD’s principal and earnings in the form of a payout, which in effect closes the original account.
Some institutions may have default instructions in place, such as setting a CD to automatically rollover, for when it matures. In the case of Raisin, customers can visit their account dashboard and easily change their CD rollover preferences up until a CD is set to mature. Consult either the CD’s product terms and/or your financial institution to determine your options and set your preferences for when a CD matures.
Can I Withdraw Money from a CD Account?
Withdrawals from a fixed-term CD account prior to its maturity may not be permitted or may be subject to a penalty fee in addition to lost earnings. Check with your bank to find out what it may cost you to access your funds early. If you acquired a CD through Raisin, you can refer to the CD’s product information sheet. Raisin Customer Service can also provide assistance in calculating early withdrawal penalties.
There is a category of CD account known as a no penalty CD that offers more flexible terms with respect to early withdrawals. As the name suggests, you may be able to avoid early withdrawal penalties if you purchase a no penalty CD.
For most CDs, the ideal time to make a withdrawal from a CD account is at maturity. This is when there are no restrictions or penalties associated with accessing your cash. You can withdraw all the CD’s funds, closing the account, or take out some and roll over the rest.
Find and Open CD Accounts, All Through the Convenience of Raisin
With Raisin’s unique online marketplace, you can compare and access an exclusive selection of federally insured CDs and certificates with competitive rates and flexible features, all with a single one-time registration, all in one portfolio.
The CDs and certificates offered through Raisin are a smart alternative to the standard savings account you may get through a local brick-and-mortar financial institution. It also pays to compare the rates your longtime bank is offering for CDs and what’s available through Raisin’s online marketplace. Raisin exclusively selects higher-earning products from its network of partner financial institutions.
What Can a CD Account Be Used for?
The way you use a CD account should be tailored to how it works. A CD account differs from, say, a money market account or a checking account foremost in accessibility of funds. With a CD, you cannot easily add or take out funds. So a CD doesn’t lend itself well to serving as a day-to-day savings account or the account to hold your emergency fund. A CD shines when it’s used to accelerate the growth of cash reserves you don’t expect to need to spend in the near future. If you are saving for college, CDs can help. If you foresee needing to purchase a car or putting a down payment on a house in a few years, CDs can help.
Fixed-term CDs vs. No Penalty CDs
If access to funds matters more to you than tapping the very best rate, look into no penalty CDs, which typically offer stronger rates than savings accounts but don’t come with early withdrawal penalties. Generally, no penalty CDs don’t pay quite as well as fixed-term CDs.
How to Choose a CD Account
What Is Raisin?
Raisin brings together high-yielding savings products offered by a network of U.S. financial institutions. It’s your destination to discover competitive savings products and start saving wisely. Select and fund multiple savings products from different institutions and manage them all from one account.
Funds deposited into any of the savings products available through Raisin are always held by a federally insured financial institution. A very easy and safe way to diversify your deposit portfolio. We use a host of cybersecurity measures to protect your funds and sensitive information.
Savings products from our network of financial institutions offer flexible terms and some of the most competitive interest rates. You can easily find the right product or mix of products for you.
One account to hold all your deposit products. Simplified statements. Easy access to manage your funds – all through a streamlined digital platform.
How Raisin Protects Your Money and Personal Information
Federal Deposit Insurance Corporation
National Credit Union Administration
Cybersecurity is a top priority at Raisin
Open an Account in 3-5 Minutes
the right product for your savings goals.
with an email address and password, then verify your identity and bank information.
the savings products you add to your new Raisin account.
How Raisin Compares
Raisin is a digital platform that gives savers unparalleled access to a variety of deposit products through the convenience of a single account, helping you unlock the growth potential of your cash savings.
Raisin customers use the platform to fund federally insured deposit products offered by numerous U.S. banks and credit unions with a wide range of maturities and APYs (annual percentage yield), allowing you to build a savings strategy to suit your earning and liquidity needs.
Raisin is not a bank. It provides the digital “storefront” where banks and credit unions can promote their deposit products.
Raisin is operated by Raisin LLC, a 100% subsidiary of Raisin GmbH, a trailblazer for open banking in the deposits and investments space. In the U.S., Raisin helps banks and credit unions improve their deposit funding by offering national reach for their retail deposit products, and provides savers with better access, more choice and higher convenience when evaluating savings products from FDIC insured banks and NCUA insured credit unions.
Your Raisin account gives you access to savings accounts and certificates of deposit offered by a variety of banks and credit unions with the security of federal deposit insurance. These products include:
High-yield Savings Account (HYSA). As its name indicates, this account type functions like a traditional savings account — with typically no restrictions on depositing and withdrawing funds — but earns interest (or dividends in the case of credit union savings products) at rates that are higher than the national average for standard savings accounts.
Money Market Deposit Account (MMDA). Also known as a money market account or MMA, this type of savings account offers a varying rate that allows you to earn interest (or dividends) on your funds with maximum flexibility for withdrawals. Like a HYSA, an MMDA offers features of a traditional savings account with typically higher returns.
No Penalty CD. Through the flexibility of a No Penalty CD, you can lock in a competitive rate for a fixed term with the option to make a full withdrawal without having to pay a penalty for the early termination. Terms and conditions may vary by product. Please see specific product terms for more details.
Fixed Term CD. With this longstanding savings vehicle, funds are held for a fixed term, and a competitive APY (annual percentage yield) provides safe, predictable earnings. In contrast to No Penalty CDs, typically you are charged a fee if you do not complete the full term of the Fixed Term CD.
Interest (or dividend in the case of credit union savings products) is compounded daily and posted to your account monthly.
The short answer is yes! Raisin exclusively partners with FDIC-insured banks and NCUA-insured credit unions.
For Raisin customers who hold savings products offered by one of our partner banks, funds are insured by the FDIC up to the maximum amount in accordance with and as permitted by law at each bank holding their funds. The standard deposit insurance coverage limit is $250,000 per depositor, per FDIC-insured bank, per account ownership category. Ownership categories as defined by the FDIC include single bank accounts (owned by one person/depositor) and joint bank accounts (owned by two or more persons/depositors). Revocable trust accounts and some types of retirement accounts (e.g., IRAs) are among the other ownership categories covered by FDIC insurance. All deposits you have at a bank — whether made through Raisin or otherwise — count toward the deposit insurance limit. If funds held at a bank in a certain ownership category exceed the coverage limit, then the amount in excess of the limit will not be insured.
For Raisin customers who hold a savings product offered by one of our partner credit unions, funds are insured by the NCUA through its Share Insurance Fund. According to the NCUA, each credit union member has at least $250,000 in total coverage. The Share Insurance Fund insures individual accounts up to $250,000. Additionally, a member’s interest in all joint accounts combined is insured up to $250,000.
At Raisin, cybersecurity is our priority. Raisin is a SOC 2 certified platform, meaning it has been validated by outside auditors across five (5) key information security principles. We also use a variety of measures to protect our customers' data, privacy and transactions, including:
• User authentication. The Raisin platform uses multi-factor authentication combined with leading authentication technology to validate our customers’ identities.
• Data encryption. Your personal information is encrypted in-transit and at rest using advanced cryptographic security algorithms.
• Site protection. Web application firewall advanced internet protection technologies are implemented to protect Raisin.com from malicious actors, botnets and denial of service attacks (DDOS).
• Monitoring. An always-on information security monitoring platform detects and alerts us to information security events.
• Assessments. Our platform undergoes vigorous security assessments and testing throughout the lifecycle of application development, from architecture planning to production phases.
Cloudflare™ is a registered trademark of Cloudflare, Inc.
A. Check out our savings marketplace and choose a product in which you would like to deposit money.
B. Create your username and password.
C. Complete an application and, after successful identity verification, link a bank account from which to fund your first savings product.
D. Start earning interest as soon as your money is received by the bank or credit union offering the savings product you selected.
Any questions or concerns? Email us at email@example.com.
All deposits and withdrawals are completed within one to three (1-3) business days. After the initial deposit a withdrawals limitation for the first few business days may exist.
Business days are Monday through Friday excluding U.S. bank holidays.
For products offered by banks, all necessary registration is handled when you become a Raisin customer. One of the many benefits of our platform is that you can open a single account and earn competitive interest rates from banks in the Raisin network. When you select and fund a savings product offered by a credit union, there is an additional step of becoming a member. Raisin makes that process quick, easy and free. You still have one Raisin login and can view all your savings products in one convenient dashboard.
The current APY for your savings products can always be viewed on the Account Overview page when you are logged in to Raisin. This information also appears on monthly statements.
You cannot currently link your Raisin account to a third-party app, but we may offer this feature in the future. For now, you will not be able to link your selected savings product to a third-party app even if the bank or credit union offering that product does so outside of the Raisin platform.