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Are CDs (Certificates of Deposit) Worth it?

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When it comes to setting your savings goals, deciding where to park your hard-earned money is a critical step. You have probably heard of Certificates of Deposit* (CDs) as a savings method. But are they the right choice for you? And do current CD rates make them worth your while? In this blog, we'll break down the pros and cons of CDs, helping decide if they are right for you.

What is a CD?

Let’s have a quick refresh on the basics of CDs. A certificate of deposit is a savings account where you lock in a fixed amount of money for a specific period of time, ranging from a few months to five years. It’s like a financial time capsule—you stash your cash until a later date (known as the “maturity date”). In return, you will receive your original funds plus the interest you have earned.

For a deeper dive into CDs and how they work, you can check out our previous blog.

Pros/Cons of CDs

Every savings strategy has its own mix of pros and cons. Before opening a CD, make sure that you fully understand both sides.


  1. Higher Interest Rates: CDs typically offer better interest rates than regular savings accounts. Also, with the right timing and strategy, you can take advantage of high interest rates as they become available in the market.
  2. Low Risk: When it comes to growing your savings, CDs offer a steady and secure path. Unlike the rollercoaster of stocks and other investments, CDs are not impacted my market fluctuations. Plus, with FDIC insurance, your money is safe even in the rare case of bank failure.
  3. Predictable and Guaranteed: When you open a CD, your rates are locked in. This means your CD guarantees both your initial deposit and any earned interest—as long as you don’t withdraw before the maturity date. This predictability helps with your future budgeting and financial planning.
  4. Variety of Terms: Flexibility is the name of the game with CDs. Terms can range from a few months to several years, allowing you to handpick a timeline that aligns perfectly with your goals and current financial state.
  5. Laddering: By strategically staggering your CD terms and maturity dates, you can benefit from rising interest rates while still maintaining access to some of your savings. This strategy is known as a CD ladder.


  1. Early Withdrawal Penalties: Want to make a quick draw from your CD? Think again. If you need to dip into your funds before the agreed-upon maturity date, you'll face penalties and fees. CDs are like fine wine—they need time.
  2. Potential Missed Opportunities: Timing is everything. If interest rates surge after you have locked in your CD, you could miss out on the chance to invest in higher-yielding CDs because your funds are already tied up in ones with lower-rates.
  3. Limited Liquidity: CDs are like sturdy vaults in the savings world. They are designed to hold money securely for a fixed period. That means you will not have the same immediate access as you would with a regular savings account.
  4. Minimum Deposit Requirements: For some, the initial deposit might be a hurdle, especially if you're working with limited funds. Plus, in order get the most return from your CD, you may also need to make a larger initial deposit, which might not sound very appealing.
  5. Low Returns: CDs are mainly for savingnot investing. While their interest rates are typically higher than regular savings accounts, they may still be lower compared to other investment options. If you are after rapid wealth growth, you might want to consider riskier options like stocks and bonds.

Are CDs worth it?

Opening certificates of deposit can be an excellent choice in several ways, especially in the following situations:

If you have short-term savings goals: Perhaps you are saving for something like a down payment on a house, vacation, new car, or even a wedding. You can choose CDs with maturity dates that align with the timing of your financial needs. This way, you can earn a little extra interest until it’s time to cash out and make those long-awaited purchases!

For keeping your money out of reach: Placing your money in a CD can act as a safeguard from impulse buys. Since CDs have penalties for early withdrawals, this serves as a hurdle that discourages you from making unplanned purchases, allowing you to stay on track with your financial goals. Additionally, this provides you with the time to carefully consider how you want to use your money in the future, whether that involves investing, saving, or planned spending.

Preserving your money without risk: If you’re more of a “slow and steady wins the race” kind of person—and if you would like to avoid the stock market rollercoaster—then CDs are for you. can be a smart choice for those who prefer avoiding stock market risks. If you are seeking a secure way to grow your money and are comfortable having it tied up for some time, CDs can be a great option.

When the interest rates are high: Let’s talk about seizing the day…or the high interest rates. We can’t predict how CD rates will look in the future. So, it's smart to grab the good ones while they're still available. This way, you'll have a guaranteed way to earn more from your money later on.

Should I open a CD today?

Interest rates are red hot right now in 2023. If you are contemplating opening a CD account or setting up a CD ladder, now might be the right time to ride that wave. Remember, these favorable rates are fleeting and will not last much longer, so it's a smart move to grab this opportunity and lock in those rates for your financial future.  

Are you shopping for the best CD rates? At Academy Bank, we're offering high-yield options, including 9-month CDs at 5.25% Annual Percentage Yield (APY)* and 13-month CDs at 5.40% APY*. Explore our range of term options* to find the perfect fit for your savings goals!

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*A penalty may be imposed for early withdrawal. The Annual Percentage Yield (APY) is accurate as of 09/20/23.  CD rates are subject to change at any time and are not guaranteed until CD is opened. Fees charged to the account could reduce earnings on the account.