How to get more from your savings

(BPT) – Many options exist when it comes to investing, and the variety of choices can be overwhelming. Whether it’s stocks, capital investments or the latest investment tool, each seems to come with its own set of rules and specialized terms. But one tool stands out as simple, safe and accessible to the average consumer without a lot of bells and whistles: the Certificate of Deposit.

The relative straightforwardness of Certificates of Deposit is what distinguishes them from other investment tools. While CDs may be offered in a wide range of terms, the basic framework is the same across all CDs: An investor commits money over a certain period of time and the bank pays out a pre-determined interest rate at the end of the term.

Top benefits of CDs include:

  1. FDIC insured. Regardless of market fluctuations, the principal of your deposit is guaranteed, up to federal maximums (typically $250,000 for individuals).
  2. Stable interest rates over the term of the deposit. Most CDs come in the fixed-rate variety, but banks can offer variable-rate CDs, where interest is tied to the market, and adjustable-rate CDs that allow the consumer to adjust the rate of interest on the CD to match market trends.
  3. Low or no fees for the investment, although there is usually an interest penalty for early withdrawal of the deposit — in general, some percentage of the already accrued interest.

In general, the returns are higher on longer-term CDs, but banks often see the value in offering short-term CDs with moderately high interest rates to educate consumers and increase participation in these valuable savings programs. Once the value of including CDs in investment portfolios is demonstrated, it’s clear why so many people choose to put a portion of their money into these types of savings accounts.

Looking for a safe place to put your money? Get more tips, and the latest rates and terms, at American State Bank, or contact your financial institution.