We all know the importance of saving money, but how to save and where to put that money are important questions, too. There are many savings options, after all, and how you handle your money depends on your financial goals and where you are in your life.
Despite the fact that each person is in a slightly different financial situation, there are two common ways of saving money, and most anyone can benefit from either one. You can either deposit money into a savings account or a open a certificate of deposit (CD) account.
So, which one is right for you? Before jumping into too much detail, let’s first take a quick quiz to see if a CD is your option:
If you answered D for all three of these questions, opening a CD might be the right choice for you.
Why choose a CD?
People choose CDs primarily because they typically have higher interest rates than savings accounts and, therefore, may offer a greater return on your money.
If you want a guaranteed rate of return for your money, or simply want to add some security to your portfolio, a Certificate of Deposit (CD) may be your choice. With a CD, you deposit money for a specific period of time and your patience is rewarded. If you do need the money that you've put in a CD, you can withdraw it — but doing so could incur a penalty for early withdrawal.
The bottom line is, if you don’t need the money for one, two, three or more years, putting it in a CD could allow your funds to grow more quickly than in a traditional savings account. Many types of CDs exist, too, so make sure to check out all of your options before you open one.
If you’re not entirely certain about whether you’ll need your money in the near future, a savings account can be a better option.
Just like CDs, there are many types of savings accounts, and they can be tailored to meet your individual needs and goals.
To learn more about the great options available, visit usbank.com and find the account that’s right for you.