What is a certificate of deposit and how does it work?

A certificate of deposit is a savings account that typically earns a higher rate of interest than a traditional savings account but requires you to lock in those dollars for a specific amount of time. If you have extra money that isn’t needed right away, consider putting it in a certificate of deposit, or CD.

How does a CD work?

CDs may give you higher returns that traditional savings accounts, while allowing you to withdrawal funds only after a specific time period, or a term. Withdrawing from your CD early will typically result in fees. Terms can range from three to six months, or one year or longer. CDs are also FDIC-insured, typically up to $250,000. Contact a Branch Banking Representative for details and restrictions.

When considering a CD, you should review the following:

  • CD opening deposit: You are usually required to deposit a minimum amount. At Adirondack Bank, the minimum is $1,000.
  • CD terms: Your money will grow until it matures at the end of the term. Terms at Adirondack Bank range from three months to five years.
  • CD rates: Rates are fixed with a CD. There’s no risk of the rate going up or down during the term.
  • Early withdrawal penalty: If you pull out money before the term ends, you could be hit with a penalty. Contact Adirondack Bank for full details about withdrawal penalties.
  • Laddering: You could take advantage of higher interest rates by purchasing more than one CD. You could deposit money in CDs of different terms called laddering. Depending on the series of terms you choose, this approach allows one CD to mature, giving you access to the funds without paying a penalty.

Once your CD matures, you have the option of putting the funds towards something you’ve been saving for or reinvesting in another CD. 

CDs are a great motivation for saving, giving you added protection for your savings goals. If you’re interested in opening a CD, visit adkbank.com or contact any Branch Banking Representative for more details.

The information is this article was obtained from various sources not associated with Adirondack Bank. While we believe it to be reliable and accurate, we do not warrant the accuracy or reliability of the information. Adirondack Bank is not responsible for, and does not endorse or approve, either implicitly or explicitly, the information provided or the content of any third-party sites that might be hyperlinked from this page. The information is not intended to replace manuals, instructions or information provided by a manufacturer or the advice of a qualified professional, or to affect coverage under any applicable insurance policy. These suggestions are not a complete list of every loss control measure. Adirondack Bank makes no guarantees of results from use of this information.

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