The CD supremacy over a savings account

Up until a couple of years ago, numerous people didn’t even know what a CD is. They had no idea about the fact that a CD stands for certificate of deposit and that it is a type of account that secures savings, giving a high interest rate at the same time. Those who don’t know anything about a certificate of deposit or who know only a little about these accounts should learn more about them. They can definitely represent the difference between saving a lot of money with the help of an account and just saving some money.

In order to learn more about a certificate of deposit, we should first learn where to find it. Well, exactly like a savings account, a certificate of deposit is offered by any bank. The difference between the savings account and the certificate of deposit (CD) stands in the time frame, the benefits, the advantages offered to the client, the features, as well as in the terms and the requirements that the client has to meet. Both these accounts have their advantages, as well as their disadvantages. You, as a bank client, are the one who decides which of these two accounts best suits your needs. However, you should be aware of the fact that financial experts recommend the certificate of deposit.

Now, let’s take their features one by one. The advantage of a savings account over a CD is represented by the ready access. If you saved cash and want to secure them but also want to have easy access to the money, then a savings account is recommended. A savings account can be compared with an ATM in which concerns the withdrawal of your money. Those who want to take money out of a certificate of deposit should know that they have to wait until the established term is reached. The money deposited in a certificate of deposit cannot be touched as long as the term has not been reached. However, if you feel attracted by the high interest rate practiced by certificates of deposit, then also consider building an emergency fund; this will keep you away from trouble and for penalties applied for early withdrawals. When you have to solve an emergency, you think that the penalty doesn’t matter anymore, but you soon realize that the percentage is quite high and you could have had much more money.

Financial experts recommend companies with short term capital to use both a certificate of deposit account and a savings account. This is better for such companies, but those that have a long term capital should only consider the certificate of deposit. A CD represents a way in which the money you already saved is secured and quickly multiplied. It is not a good idea to deposit a lot of money in a savings account, especially if you don’t need the money in the near future, as the interest rate is a low one. Consider all these before choosing a certain type of saving method.