We’ve all heard it – it’s important to have money set aside for emergencies. If you’re like this blogger, then you’ve probably started one (or more) savings or money market accounts with this intention in mind…
You’re going to put 10% of every paycheck into the account, and then not touch that money unless you really need it. But then the credit card bill was a little higher than you expected, the car needed new tires and there was an unexpected,
cross-country trip for a best friend’s wedding. So you dipped in here and there to that savings account, and now most of it’s gone.
How is saving money using a CD (certificate of deposit) any different?
We’re so glad you asked…
CDs are designed around your investment staying put for a set amount of time.
CDs cannot be linked to a checking account or credit or debit card for overdraft or “rainy-day” transfers.
CDs also come with early withdrawal penalties, which means you’re more likely to keep that money in the CD until it “matures,” or reaches the end of the contract – ultimately earning you more money than you’d likely
receive with a savings account.