CDs in a Nutshell

Certificates of Deposit (CDs) let you lock in a guaranteed rate for a set term—from a few months to five years or more. Because the rate is fixed, a CD can be a smart place for cash you won’t need right away but still want fully protected by FDIC or NCUA insurance.

1. Key Points at a Glance

2. Quick “Is This CD Worth It?” Checklist

1. Compare the APY to a high-yield savings account for the same time horizon.
2. Match the term to when you’ll need the money—never guess.
3. Check the penalty—is it two months of interest or a full year?
4. Confirm insurance—the issuing bank or credit union must be FDIC- or NCUA-insured.

3. How to Open a CD in 3 Steps

1. Pick your term and amount based on your timeline.
2. Apply online or in branch—have your government ID and funding account ready.
3. Note the maturity date and set a calendar reminder a week early to decide whether to withdraw or roll over.

4. Smart CD Strategies

• Build a ladder: Split your cash into several CDs with staggered maturities (e.g., 1-, 2-, 3-year). You’ll lock in longer rates yet gain regular access to funds.
• Barbell your cash: Keep part in a short CD (or savings) for flexibility and part in a long CD for a higher rate.
• Watch for no-penalty CDs: Some banks let you pull funds early once without losing interest—handy if rates jump.
• Re-shop at maturity: Don’t let a CD auto-renew into a lower rate; compare offers each time.