As Interest Rates Rise, Now Is the Time to Invest in CDs

Interest rates are finally rising! We’re sure you are hearing that on the news and in articles, but what does that mean for your investments? Should you invest in stocks or put it in your Savings Account? There are so many options, but we have another suggestion: CDs. And no, we’re not talking about the CD of your favorite 90’s band.  We are referring to a Certificate of Deposit (CD).

What is a CD?

CDs are investment products that provide a low-risk opportunity to earn interest over a set amount of time. This means that the investment does not fluctuate with the stock market, offering you a bit more security. CDs typically pay higher interest rates than other savings products and are federally insured to at least $250,000 by the NCUA. Funds may be withdrawn early, but there may be a penalty.

Why is now a good time to invest in a CD?

We know, it has been a while since CDs have been top of mind, but it’s time to bring them back. With rising interest rates, CD rates also increase and offer a safe way to invest your hard-earned money. And we know what you’re thinking: how do I know if they are right for me? Let’s dive a little deeper into the benefits and potential drawbacks of investing in a CD.

Derek Brainard, manager of Education Services at the Center for Education and Financial Capability at AccessLex Institute, outlined the three scenarios below where CDs work well in a recent article:

  • Protecting savings: These may include saving for a down payment on a home or car. Whatever the goal, the money won’t be used for years and can stay safely out of reach in CDs.
  • Building short-term wealth: CDs with short terms, such as one or two years, can make sense if there’s a plan to later invest that money. For example, if you want to invest a large sum in the market, you might spread out when you buy stocks or funds over time using a popular investing strategy called dollar-cost averaging. The money waiting to be invested could go into CDs to earn more interest than it would in a regular savings account.
  • Ensuring returns without risk: Investing in long-term CDs is generally best for people, typically retired, who want to avoid risking their money in the stock market. They also want to stop their savings from eroding because of inflation.

What if rates keep climbing?

There is a good chance that rates will continue to go up. With a typical CD, you are locked into the rate for the entire term. Advia understands that this can be a drawback and has a solution!

Advia’s new Bump Rate CD will allow members to bump their CD rate up to the current market rate one time during the term of the certificate. Sound too good to be true? It isn’t! Here is an example:

If a member opens a 60-month Bump Rate CD at 2.50% APY, and they decide to utilize their bump 2 years later when the APY is 4.00%, their certificate will be changed to 4.00% APY from that point forward (a 1.50% increase over their initial APY).

Sounds great! How do I open a CD?

Opening a CD is easy. Simply pick the investment term and choose your investment amount. You can open your CD online or contact Advia by stopping by a branch or giving us a call. A representative can walk you through which CD is right for you.

Current Member Advantage Rewards do not apply to this certificate type. Early CD withdrawal penalties may apply. Minimum balance to open a CD is $500. One-time during the term of your CD you may request a rate increase to our current published rate for the equivalent term CD. The higher rate will be earned for the remainder of the term. Rates are subject to change daily and may not increase over the term of the CD. CD will renew into a regular CD of the same term. To exercise this bump feature, you must call us at 844.238.4228 or stop into a branch.

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