Ask Raisin: Are CDs worth it?
Certificates of deposit (CDs) are low-risk savings instruments with fixed returns. They offer benefits like guaranteed returns and flexibility but have drawbacks such as lower earning potential compared to other investments.
Key takeaways
Key considerations: term length, interest rate, penalties, minimum deposit
Benefits: low risk, flexible terms, higher interest rates than savings accounts
Drawbacks: lower earning potential, inflation impact, reinvestment risk, taxed interest
The biggest mistake you can make with your money is letting the decision-making process delay you from earning the interest you deserve.
To begin growing your wealth, financial advisors may recommend exploring investment options at all risk levels. One such option is opening a Certificate of deposit or CD. These comparatively low-risk savings instruments come with a fixed rate of return for a set period of time. If you have the patience to wait out your term, they’re all but guaranteed to make you money.
But are CDs worth it?
In this guide, Raisin's financial experts weigh in on the benefits and drawbacks of CDs. Continue reading to learn more about this investment option and whether it’s the right choice for your financial future.
What is a certificate of deposit (CD)?
A CD is a type of savings account or bank deposit offered by banks and credit unions. Your CD will pay a specified amount of interest over a pre-determined period of time. For example, a 5-year CD matures (or earns interest) over five years.
In most cases, there is an expectation that you will not draw on your deposited funds during that period. If you withdraw funds early, there typically is a financial penalty. However, if you choose a no-penalty CD, you can typically liquidate your assets, including interest accrued to-date, without incurring such a penalty. However, given their flexibility, these accounts may have a lower annual percentage yield (or APY) than more traditional CDs.
At the end of your CD's term (or date of maturity), you will receive the full amount of your deposit back, plus interest.
When choosing the right CD for you, consider the following:
- The length of term: CD terms typically range between 1 month and 5 years or longer. It’s wise to think about any large upcoming expenses before committing your funds to a CD. For example, if you plan to buy a home or vehicle in 5 or 6 years, a 5-year CD might be a smart investment.
- The interest rate: CD interest rates are based on inflation, market dynamics, and the federal funds rate. As a result, they can differ from month to month. While not investing now means earning no interest at all, you can be strategic about when to put money into a CD account.
- The penalty for early withdrawal: You can’t plan for emergencies. Even if you don’t plan to withdraw your funds early, it is important to consider any eventuality. Determine whether your CD has any penalties associated with early withdrawals, or look into no-penalty CDs.
- Minimum deposit requirements: Some types of CDs require you to make a minimum deposit in order to open a CD account. High-yield CDs are one example. These high-yield accounts frequently have higher interest rates and can earn you more money over time. Fortunately, all CD accounts available through the Raisin platform have just a $1 minimum deposit, making it easy to start earning valuable interest.
Bank
Product
APY
Maturity
mph.bank, a division of Liberty Savings Bank, F.S.B., Member FDIC
Member FDIC
Callable CD
4.00%
60 months
$2,000.00
Raisin is not an FDIC-insured bank or NCUA-insured credit union and does not hold any customer funds. FDIC deposit insurance covers the failure of an insured bank and NCUA deposit insurance coverage covers the failure of an insured credit union.
Benefits of a CD account
The most significant benefit of opening a CD account is the guaranteed returns. For those new to investing or who don’t feel comfortable taking aggressive risks with their money, the level of security and predictability provide peace of mind. We’ll discuss the other CD benefits below.
CDs have variable term lengths
CDs are flexible, allowing you to choose a term length and date of maturity that align with your personal savings goals. It is common for individuals to open more than one certificate of deposit. This can help you to simultaneously address short-term and long-term savings goals, especially if you build a “CD ladder”, which involves investing in a number of CDs with varying maturities.
Say for instance you have $300,000 to invest. You might be able to earn more in interest by investing all $300,000 into a three-year CD. But maybe you need to retain a third of that to pay for outstanding bills, like college tuition or business operations.
What you could do is split that $300,000 evenly across three CDs maturing at regular interviews, such as one-year, two-year, and three-year CDs. This way, you would have a portion of the initial investment approaching maturity every year and you would be able to spread your risk of locking in a lower rate across multiple investments.
Whether you’re investing $3,000 or $300,000 and your time horizon is 3 months or 3 years, the fundamentals behind this investment strategy still apply: stagger your maturity dates and diversify your portfolio to benefit from maximum flexibility and returns.
CDs have an interest rate advantage over traditional savings accounts
Typically, CDs offer higher interest rates than traditional savings accounts. If you’re comparing high-yield CDs, you may find interest rates similar to HYSAs. However, HYSA interest rates are typically variable compared to the fixed rates offered by CDs. If you aren’t planning on needing regular access to your savings, putting those funds into a CD may ultimately yield higher returns.
Drawbacks of CD accounts
There are a few drawbacks to consider when determining if a CD is right for you.
Consider the following:
- CDs are a less aggressive investment option, so earning potential may be lower than investing in stocks or bonds.
- Funds in CDs are generally not accessible prior to maturity without paying a penalty fee for early withdrawal
- CDs interest rates may not keep up with inflation.
- If you choose to reinvest your CDs at the end of your term, there is a risk that interest rates may have decreased in the interim.
- All interest earned from a CD will be taxed as ordinary income, which may have tax implications.
Are CDs a good investment right now?
As discussed, interest rates can fluctuate month to month depending on the country's overall economic climate.
If you are deciding what to do with your money, CDs may be a good place to grow your money with guaranteed returns. According to the financial experts at Raisin, average interest rates are higher than they have been in decades.
"Since July 2023, the Federal Reserve has held interest rates at their highest point in over 20 years, giving savers an opportunity to earn lock in rates over 5% on CDs," says Ben McLaughlin, Chief Marketing Officer & President of Raisin. "With experts expecting rate cuts this fall, now could be the right time for savers to lock in these peak rates before they have a chance to drop."
If you are new to CDs, the Raisin platform makes it easy to compare rates and fund your first CD with a deposit as small as $1. As of July 2024, short-term CDs have uniquely high interest rates. You might consider opening a 1-month or even 1-year CD and deciding if CDs are the right investment option for you.
With that said, if the Federal Reserve begins to lower interest rates, CDs may become less lucrative. However, the core benefits of a CD account, like guaranteed returns, would remain.
Ultimately, the question of “Are bank CDs worth it?” depends on your risk aversion and savings goals. Raisin can help you lock in rates on no-penalty CDs and high-yield CDs and grow your wealth. View the best CD rates in our marketplace today.
Related Content
© 2026 Raisin SE. All rights reserved.
The Raisin name and logo are trademarks of Raisin SE. All other trademarks, logos, marks, and brand names are the property of their respective owners.
*APY means Annual Percentage Yield. APY is accurate as of April 22, 2026. Interest rate and APY may change after initial deposit depending on the terms of the specific product selected. Minimum opening deposit is $1.00.
Raisin is not an FDIC-insured bank, and FDIC deposit insurance only covers the failure of an insured bank.
Raisin is not an NCUA-insured credit union. NCUA deposit insurance only covers the failure of an insured credit union.
Raisin does not hold any customer funds. Customer funds are held in various custodial deposit accounts. Each customer authorizes the Custodial Bank to hold the customer’s funds in such accounts, in a custodial capacity, in order to effectuate the customer’s deposits to and withdrawals from the various bank and credit union products that the customer requests through Raisin.com. The Custodial Bank does not establish the terms of the bank or credit union products and provides no advice to customers about bank or credit union products offered by the applicable bank or credit union through Raisin.com. Each customer also authorizes the Service Bank to move funds among the various banks and credit unions at the customer’s request. First International Bank & Trust (FIBT), Member FDIC, is the Service Bank. Bell Bank and Starion Bank, each Member FDIC, are the Custodial Banks.
†Based on $250,000 in FDIC or NCUA insurance coverage per insurable category of ownership at each partner bank or credit union on the Raisin platform (each a "Product Bank"), when aggregated with all other deposits held by you at such Product Bank and in the same insurable category. Deposits made through Raisin will be eligible to receive deposit insurance from the FDIC or the NCUA (each a "Deposit Insurer") in accordance with and up to the maximum amount permitted by law at each Product Bank. Raisin is not a bank or credit union and does not hold any customer funds. Funds are held at FDIC-insured banks and NCUA-insured credit unions. Deposit insurance covers the failure of an insured bank or credit union. Certain conditions must be satisfied for pass through deposit insurance coverage to apply. Customers may choose to deposit funds with identically registered accounts at different Product Banks on the Raisin platform to be eligible for Deposit Insurer coverage up to $10 million for individual accounts and $20 million for joint accounts when at least 40 Product Banks are utilized. Please be aware, however, that any deposits you have at a Product Bank, whether through the Raisin platform or outside the Raisin platform, that you may hold in the same capacity (such as in an individual capacity or joint capacity) count toward the applicable Deposit Insurer's deposit insurance maximum amount, and any such amounts that you hold in the same capacity at a Product Bank that exceed the maximum insurance coverage by the applicable Deposit Insurer will not be insured. For more information on FDIC deposit insurance, please see here. For more information on the NCUA share insurance fund, please see here. You are solely responsible for monitoring the amount of funds you have on deposit at each a Product Bank, whether through the Raisin platform or outside the Raisin platform, to confirm that the deposits you hold in the same capacity at each Product Bank do not exceed the maximum deposit insurance coverage provided by the applicable Deposit Insurer.