If you’ve invested with bank certificates of deposit (CDs) before, you know financial institutions offer CDs to any customer who can meet the minimum balance requirement.
In return for depositing your funds to a CD account over a specified number of months or years, you receive a guaranteed interest rate. This low-risk investment strategy may fuel savings growth and create a clearly defined return for specific projects, like renovating a home or international travel.
These unique investments bring together three key qualities:
- Annual percentage yield (APY) guaranteed at the time of investment.
- Protection of the principal provided in the opening deposit, assuming you’re under the Federal Deposit Insurance Corporation (FDIC) per-person, per-bank, per-ownership category threshold of $250,000 for individuals and $500,000 for couples.
- No need for active oversight: The funds simply become available when the CD reaches its maturity date or roll over at a standard rate available at that time.
After deciding to commit to a CD and reaching the maturity date, investors can continue to take advantage of the benefits and keep their money growing with a CD rollover. Putting the principal and interest into a new CD keeps the investment growing.
The value of CD ladders
CD laddering is an especially valuable strategy to consider when it comes time to commit to a CD rollover. Investors can use the fixed terms offered by CDs to grow their investment while still allowing for periodic access to funds. Rolling over funds into a mix of short-, medium- and long-term CDs creates a number of decision points where investors can choose to access their funds, if needed, or continue enjoying guaranteed interest rates.
To learn more about effectively using CD rollovers, check out our infographic “5 Things to Consider With a CD Rollover.” Reach out to Comerica Bank to learn more about our robust offering of bank certificates of deposit and open a CD today.
