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How To Make Certificates of Deposit Work for You and Your Savings GoalsBy MSGCU on 12/7/2022


While music CDs don’t look like they’ll be making a comeback, Certificates of Deposit – the original CDs – are looking more and more like a smart investment right now. With interest rates rising, the earning potential of CDs is higher now than it has been for several years. If you’re already saving for a specific goal like a down payment on a house purchase next year, or a vacation you’re planning, a CD is worth considering. Here are some basic facts you should know.

What is a Certificate of Deposit?

A Certificate of Deposit (CD) is an account MSGCU offers where the money you deposit earns a fixed rate of interest for a specified length of time (term). CDs come in a range of terms, from as short as six months, to five years or more.

How is a CD different from a regular savings account?

CDs differ from savings accounts in two main ways:

  • No withdrawals. With a regular savings account, you can withdraw money as you need it. With a CD, you must leave the money in your account for the full term of the CD. If you withdraw money earlier, there is an early withdrawal penalty.
  • Higher interest. Since you agree to leave your money in the account for a predetermined time, MSGCU pays higher interest on CDs than traditional savings accounts. For instance, we currently offer a 9-month CD at a rate of 5.15% APY*, and a 23-month CD at a rate of 4.90% APY. Learn more and see rates for all CDs.

Some CDs offer a one-time bump-up in your interest rate if rates rise during the term of your CD, giving you an opportunity for even higher earnings. Members should reach out to MSGCU to take advantage of the CD bump. Any MSGCU CD with a term of three years or more offers this one-time rate bump at no cost.

When should you choose a CD over a savings account?

Both CDs and savings accounts play important roles in managing your money. You should use a traditional savings account when you need to access your money easily, such as with an emergency fund, or planned, larger purchases in the short term. If you already have these funds set aside, and you’re saving for a long-term goal, investing in a CD could be a smart move.

Here are a few situations where CDs might fit the bill:

  • You’re saving for a future purchase that’s still months or years away, such as:

    • A down payment on a new home
    • A dream vacation or splurge item
    • A new vehicle
    • College tuition
    • Home renovations

  • You have extra savings available in a no- or low-interest account, and you’d like it to earn more.
  • You have a windfall from the sale of a car or home and don’t need the cash immediately.
  • You’d like to give an investment gift to a family member, like a grandchild.

Pros and cons of CDs vs. other investments

The pros:

  • Guaranteed returns. The interest rate on a CD is fixed and guaranteed; it is a risk-free investment.
  • Safety. Your funds are insured up to $250,000 by the NCUA.
  • Higher interest than savings. While MSGCU has market-leading rates on our savings accounts, and this is a great option for accessing funds, CDs allow you to earn more than keeping your money in savings.

The cons:

  • No withdrawals. Unless you pay a penalty for early withdrawal, your money is inaccessible for the term of the CD.
  • Minimum deposit. Many CDs have minimum deposits in the thousands, although MSGCU’s minimum deposit for CDs is just $500. (MSGCU’s Grow-With-Me CD has a minimum deposit of just $250.)
  • Lower payback than some other investments. Investing in stocks, mutual funds or other investments can yield greater earnings, though they carry risk. These kinds of investments have their place in your portfolio, especially for goals further than five or ten years away. However, CDs can help balance out their greater risk with guaranteed returns.

Is a CD the right choice for you?

Still not sure if a Certificate of Deposit is the right investment for you? Contact MSGCU at 866-674-2848 to see how we can champion your savings goals. Visit for complete details about our CD options.  

*APY = Annual Percentage Yield. Minimum balance to open the account and earn the advertised APY is $500. Penalty for early withdrawal. The APY is offered as of today’s date. Terms and rates are subject to change at any time without notice. Insured by NCUA. Ask an MSGCU Representative for details.

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Category: Finance

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