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What is a CD (Certificate of Deposit)?

Learn the ins and outs of certificates of deposit

When looking for the best ways to grow your savings, you may find advice that recommends opening a certificate of deposit, or CD. That's because certificates of deposit offer some of the highest interest rates among savings products. But, before you put your money in one, it's wise to review fundamental certificate of deposit information. This way, you can be confident in your savings decision.

How does a certificate of deposit work?

Certificates of deposit are bank accounts that help you securely save and grow your money. Plus, certificates of deposit with Citizens Bank are FDIC-insured up to $250,000. This means you can earn interest on your money without incurring the risk of volatile investments such as stocks and bonds. CDs offer some of the strongest interest rates of any bank account because of their term requirements.

How long do I have to keep my money in a certificate of deposit?

CDs can have term requirements as short as a six months or as long as five years. When you lock your money in a CD, you commit to keeping the entire amount deposited for the duration of the term. If you need to withdraw your money early, you will likely face penalty fees.

The good news is that this upfront commitment of funds is the reason the bank is willing to pay you more in interest. So, if you can afford to leave your money in the CD for the duration of the term, whether it's six months or 60 months, this is one of the best ways to maximize your interest.

How much money do I need to open a certificate of deposit?

CDs aren't like traditional savings accounts, which allow you to deposit more money into them at any time. Rather, you can only put the opening balance into a CD. This means that you'll want to put as much into it as you can afford so that it earns maximum interest. Also, some of the CDs with the best interest rates or longest terms may require higher opening balances, such as $2,500 or even $5,000, though you can find CD options with lower balance requirements. When you're ready to open a certificate of deposit, you can review the specific interest rate and balance requirements for it.

Open a CD with Citizens Bank

Now that you have some basic certificate of deposit information, you may be interested in building your savings with a CD from Citizens Bank. You can apply for a CD online in minutes, or speak with a Citizens Bank customer care representative at 1-877-360-2472. The representative can answer your questions as well as help you open your CD.



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