A Certificate of Deposit (CD) account is a savings account that’s federally insured. It will offer a fixed interest rate and a date of withdrawal (maturity date). The best part of owning a CD account is that most do not charge monthly fees.
I’ll go over what a CD account is, and if it’s safe or not below.
What Makes a CD Account Safe
Most CD accounts are FDIC insured, which will insure your account protection. In other words, if a bank or credit union fails, you’ll get your money back fully guaranteed. The FDIC will insure banks, while the NCUA will insure credit unions. There is no need to sign up for these features, it will already be applied to the bank or credit union you’re with.
You can check the coverage of a bank or credit union by going to the bottom of their website. There, you’ll see if they’re NCUA or FDIC insured. If you don’t see this, I wouldn’t recommend opening an account with them. You can risk not getting your money back or having a less secure account.
How Are Online CDs Safe?
Like most CD accounts, majority of online banks are federally insured. The difference between an online and traditional bank is their customer support system. If you’re in need of assistance, you can contact your online bank via phone or email. A traditional bank will have those options, and a physical branch to visit as well.
There are times when looking for an online CD account, you will not recognize the bank. Normally, an online bank will be apart of another big bank that’s well known. Both online and traditional banks will provide their members with security measures to protect their accounts. There are many different security systems and procedures that are in place to prevent hackers or fraud.
Pointers For Using a CD Account
A CD account is easy to manage depending on the bank provider you have. If there are any questions you may have, customer support will always be there to assist you. Normally, CD accounts will not allow you to have any extra contributions. In other words, you will not be able to add more money into your account after you’ve made an initial deposit. It’s a good idea to track your CD maturity date and grace period. With CD accounts, they will only give you a small time-frame to withdraw or deposit more money.
When you open a CD account, you’ll have to be sure that your funds are all insured. Go to the bottom of their website and see if they are FDIC or NCUA insured at all. These accounts come with lots of features you can benefit from. Since banks don’t have physical certificates anymore, your CD account will most likely be online. In other words, it will definitely save you the paperwork.
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Conclusion
There are many banks that offer a Certificate of Deposit account to their clients. Plus, when you open one, you’ll see that there are normally plenty of features that will attract your attention. You’ll benefit greatly from saving money with a new account. However, not all banks will offer an excellent CD account. Overall, most accounts are safe to open after you’ve done your research for the perfect account.
