CDs 101: Earn more on your savings today

By Savvas Dimitratos

A Certificate of Deposit, or CD, is a savings tool that allows you to put money aside for a set period of time, often at a higher interest rate than a traditional savings account.

What do you need to know about CDs?
CD terms can range from a few months to several years, so they are typically used for money you don't need right away. Generally, CDs are safe and secure because they are insured by the FDIC for up to $250,000 per account holder.*

The major benefits of a CD are:

  1. Higher interest rates than a traditional savings account

  2. Guaranteed interest rate that won't change due to the economy or market conditions

What should I look for in a CD?
Select the term that matches your goal's time line. Some CDs, like the TD Choice CD, reward savers with better interest rates if you deposit more money or have an existing relationship with your bank.

CD accounts usually assess a penalty if you withdraw money before the term ends. However, some, like the TD No-Catch CD, give you the flexibility to access your money during the term.

How does a CD fit into your savings plan?
CDs can help you grow your money for future goals rather than spending now. If you're an impulse shopper or need help saving, CDs are great for short- or long-term goals, including:

  1. Education

  2. Travel

  3. Home improvement

  4. Retirement

If you're not sure what to do with your current savings, your recent tax return, work bonus or a recently sold house or car – a CD is a safe and rewarding way to earn more interest on your money.

How to save

You can really amp up your savings when you open a CD. Here’s how to get started:

  • Create a weekly or monthly savings plan with a goal
    This will put you on the right track to financial freedom
  • When you hit your goal, use those funds to open a CD
    Talk to your bank and select a CD with the term that matches your goal's time line
  • Watch your savings grow faster than in a traditional account
    CDs offer more savings rewards than a traditional account but are still safe and predictable

This article is based on information available in January 2018. It is for general informational purposes only. It is not intended to provide specific financial, investment, tax, legal, accounting, or other advice and should not be acted or relied upon without the advice of a professional advisor. A professional advisor will recommend action based on your personal circumstances and the most recent information available.

*Certificates of Deposit at financial institutions other than TD Bank may not be subject to FDIC insurance. Check with the issuing financial institution for details on your CD coverage.