The right certificate of deposit depends on how much you have saved, when you’ll need the money and how much flexibility you want.
When you’re working toward a goal, it helps to know your savings are making progress. But choosing where to keep that money can feel complicated, especially when interest rates and account options keep changing.
A certificate of deposit, commonly called a CD, offers a fixed rate for a set period. In return, you agree to leave your money in the account until the CD reaches its maturity date.
The best CD isn’t necessarily the one with the longest term or even the highest advertised rate. It’s the one that fits your starting balance, timeline and plans for the money.
For short-term goals, look for a CD with a term that ends close to when you expect to need the money. Common goals may include a vacation, vehicle purchase, tuition payment, home down payment or another planned expense.
A shorter CD term can give your savings time to grow without keeping the money out of reach for several years. Before opening one, consider:
If your goal is six months away, a longer CD may not be a good fit, even if it offers a higher rate. If your goal is a few years away, you may have more terms to consider.
The key is to start with your timeline and then compare the CDs that match it.
Young savers with smaller starting balances may benefit from CDs that offer:
A low minimum makes it possible to start without waiting until you’ve saved thousands of dollars. A shorter term can also feel more approachable when you’re opening your first CD or saving for your first major goal.
An add-on CD may be another option to consider. Unlike a traditional CD, an add-on CD lets you make additional deposits during its term. This can help you continue building the balance as you earn money or receive gifts.
Veridian offers CDs with minimum deposits as low as $1,000, terms ranging from six to 60 months and add-on and youth CD options. Current minimums, terms and availability should always be confirmed before opening an account.
Starting with a small balance is still a meaningful step. The goal isn’t to start with the largest amount possible. It’s to choose an account that fits your budget and helps you build a consistent savings habit.
CD rates are typically shown as an annual percentage yield. APY reflects the amount you could earn over one year when compound interest is included.
A CD’s rate may depend on:
CD rates can change over time, but the rate on a fixed-rate CD generally remains the same after the account is opened. This provides a predictable return during the term.
That predictability can be useful when you’re saving toward a goal with a clear date and want to know your money will continue earning at the locked-in rate.
There isn’t one CD rate that will always be best for every Midwest saver. Rates change, and the strongest option for one person may not fit someone else’s timeline or starting balance.
When evaluating CD rates, compare accounts with similar terms and requirements. A six-month CD and a five-year CD serve different needs, so their rates alone don’t tell the whole story.
Consider the complete account:
A higher APY may look appealing, but it may not be worth committing your money for longer than planned. Choosing a CD that matures when you need the money can matter more than earning a small amount of additional interest.
A CD generally shouldn’t hold money you may need without warning.
CDs are designed for money you can leave deposited until a specific date. Withdrawing funds before maturity may result in an early withdrawal penalty.
That can make CDs useful for planned goals, but less practical for a full emergency fund. Emergency savings usually need to remain accessible when an unexpected bill, repair or loss of income happens.
If you’re still building emergency savings, you might keep accessible funds in a savings account and consider a CD for money set aside beyond that amount.
A CD ladder divides your savings among CDs with different maturity dates. Instead of putting all your money into one long-term CD, portions of it become available at regular intervals.
For example, you could divide your savings among three CDs that mature at different times. When each CD matures, you can use the money for your goal or move it into another CD.
A ladder can provide more frequent access to portions of your savings. However, opening several CDs may be difficult when you’re starting with a smaller balance or when each account has a minimum deposit.
You don’t need a CD ladder to save successfully. It’s simply one strategy to consider as your savings grow.
When a CD reaches its maturity date, you may be able to:
The exact process and grace period depend on the account terms. Some CDs renew automatically if you don’t provide other instructions, so review those details before opening the account.
Setting a reminder before the maturity date can give you time to review current rates, revisit your goal and decide what you want the money to do next.
A CD may fit your savings plan if:
Another savings option may fit better if:
CDs at federally insured credit unions are covered by the National Credit Union Share Insurance Fund according to applicable ownership categories and limits. Individual accounts are generally insured up to $250,000.
The right CD starts with your goal, not the rate.
Think about what you’re saving for, when you’ll need the money and how much you can comfortably set aside. Then compare CDs that fit those needs, paying attention to the APY, minimum deposit, term and early withdrawal rules.
Whether you’re beginning with $1,000 or adding another account to an established savings plan, a CD can help you make steady progress with a predictable return.