Certificates of Deposit, commonly known as CDs, are financial products for individuals looking to grow their savings. With their fixed interest rates, typically higher than savings accounts, CDs offer depositors a secure place to invest money, with predictable results.
Whether you are a seasoned investor or just starting out, this article will provide a comprehensive guide to help you make informed decisions about whether CDs are the right investment option for you.
Why Invest in a CD?
A Certificate of Deposit functions similarly to a savings account but with the potential for a higher Annual Percentage Yield (APY) and a fixed investment term. APY is a standardized way to express the annual rate of return for financial products that compound interest, such as savings accounts, CDs, and other types of investments. APY takes into account the compounding effect of interest, which means that the interest earned in one period is added to the principal and the total amount earns interest in the next period. APY is expressed as a percentage and includes both the interest rate and the effect of compounding.
With a CD, you invest a lump sum for a predetermined period and receive interest on your investment when you withdraw it. These financial products can be helpful for short-term financial goals such as saving for a vacation or a down payment on a home.
Additionally, CDs are FDIC-insured, making them a low-risk option for investors. Our South Central PA locations offer competitive CD rates, making them an attractive choice for unexpected windfalls like a tax refund or inheritance.
To help you improve your initial investment in five years or less, Traditions Bank offers terms for CDs from 7 days up to 60 months. With a minimum balance to open of only $500, a CD is an excellent way to save for your future.
The Her Traditions Scholarship CD Program from Traditions Bank
At Traditions Bank, we are committed to supporting our community in various ways, including through the Her Traditions Scholarship Fund. Since Traditions Bank was established in 2002, our organization has been dedicated to empowering women and recognizing their significant role in the success of our community. The Her Traditions program aims to encourage women to take charge of their financial well-being and set inspiring goals to achieve new heights.
As part of our effort to celebrate women leaders, we award scholarships to outstanding local graduates who plan to attend college, demonstrate academic excellence, provide high levels of community service, and exhibit strong leadership qualities.
To further engage the community in Her Traditions, we recently introduced the Her Traditions Scholarship CD, a financial product that allows our customers to invest while supporting our mission. At the end of each month, we contribute to the scholarship fund based on the total Her Traditions Scholarship CD balances. Contact us today to learn more.
CD Withdrawals and Renewals
There are several actions you can take when a CD matures. We provide you with a ten-day grace period from the date your CD term ends to decide what is the best option for your invested funds. You can withdraw your funds, establish a new CD with a different term, or add additional funds to your initial investment during the grace period. If you prefer not to make changes, the balance of your CD will renew under the original terms based on the bank’s available CD rates at the time of renewal.
A penalty may be imposed if you withdraw funds from your CD early, prior to the set maturity date. This penalty impacts your expected earnings, potentially reducing the interest and principal you may receive, and will be calculated based on the term of your CD.
Partner with Traditions Bank
As a local community financial institution, Traditions Bank prides itself on getting to know our customers well, understanding their needs, and delivering the right products for those needs.
If you are in the market for a Certificate of Deposit, we are here to review your savings options to help meet your financial goals. For more information, schedule a call with our personal banking team today.
Certificate of Deposit Calculator
Use this calculator to find out how much interest you can earn on a Certificate of Deposit (CD). Just enter a few pieces of information and we will calculate your annual percentage yield (APY) and ending balance. Click on the “View Report” button to see a detailed schedule of your CDs balance and interest earned.
Protecting Your Money: Understanding FDIC Insurance and How It Keeps Your Deposits Safe
The Impact of Effortless Checking
Debt Management for a Brighter Financial Future
The Strength of Community Banking