Certificate of Deposit

Certificate of Deposit

By: Yaires Ruiz, Makenzie Kittrell, and Cedrion Butler

Explanation of Certificate of Deposit:

A Certificate of Deposit or (CD) is a type of savings account that is federally insured. It has a
firm interest rate and date of withdrawal. The date of withdrawal is also known as maturity
date. It is offered by banks and credit unions, which gives superior interest rate when customers
choose to leave a great amount of undisturbed money on deposit for a period of time.

Certificate of Deposit Requirements:

● Requires the user to deposit a minimum balance (UP TO $2000) in order to open the
Certificate of deposit

● The user should find the type of certificate of deposit that best suits them AND FILL OUT
APPLICATION.

● The user should choose the term length they want because the longer the term length, the
higher the interest rate.

● Requires the user to choose the funding source, such as online, phone transfer, or mailing
a check.

Why is a Certificate of Deposit a good option to use to grow
money?

● More secure and more protective of customer’s privacy than stocks and bonds
● Leaving the money on deposit for a stable period of time allows the certificate of deposit to pay higher

interest rates than the best savings and money market accounts.
● Very convenient because it is offered at most banks and money operating businesses.
● Low or no fees

Why might a Certificate of Deposit be a bad idea to use to
grow money?

● Harder to use Certificate of Deposits to collect the needed money for retirement
● Lower returns compared to those presented by investments, such as stocks and bonds.
● May Experience early withdrawal penalties if someone takes out money before the end of its term
● Limited flexibility when it comes to withdrawals because CDs require money to stay in the account

until its maturity.

● Inflation risk

Typical Users of Certificate of Deposits:

The people who typically would use a Certificate of Deposit would
be people who have no problem with locking away money for a
set amount of time until its maturity. This would provide them
with higher interest rates, as well as act as a long term
savings account.

Reference page:

“How to Open a Certificate of Deposit (CD).”Discover modern money, Discover Bank, Member FDIC, © 2019, salt lake city.

www.discover.com/online-banking/banking-topics/how-to-open-a-cd-account/

Armstrong, Tony. “Certificate of Deposit: What Is a CD?” nerdwallet, NerdWallet, Inc., © 2019. www.nerdwallet.com/blog/banking/cd-certificate-of-deposit/

Pritchard, justin. “How Do Certificates of Deposit – CDs Work?” the balance, .dash, © 2019, new york. www.thebalance.com/cd-basics-how-cds-work-315245

Amadeo, kimberly. “Certificates of Deposit Explained With Pros and Cons”. The balance, .dash, © 2019, new york.
www.thebalance.com/certificates-of-deposit-3305913

“Are CDs Right for You? Weigh the Pros and Cons to Decide.” ally, ally financial inc., © 2009-2019, philadelphia.
www.ally.com/do-it-right/banking/certificates-of-deposit-cd-pros-and-cons/

Taubel, jenna. “Advantages and Disadvantages of a Certificate of Deposit for Savings.” first alliance credit union, first alliance credit union, © 2018, minnesota.
www.firstalliancecu.com/blog/advantages-and-disadvantages-of-cds