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Why You Should Consider Opening a Certificate of Deposit (CD) Account

Certificates of deposit (CDs) are specialized deposit accounts that offer a fixed interest rate for a predetermined term, ranging from a few months to several years. Upon maturity, you can withdraw your initial deposit plus interest or roll over the balance into a new CD to continue growing your savings. Here are four compelling reasons to open a CD account with O1ne Mortgage.

1. Take Advantage of Higher APYs

CD accounts typically offer higher annual percentage yields (APYs) compared to traditional savings accounts. Financial institutions provide a higher rate because you agree to keep your money locked in for a set period. Generally, the longer the term of your CD, the higher the interest rate, incentivizing you to keep your money invested for longer durations. If you have extra savings that you don’t need for emergencies, investing in CDs can yield a greater return while protecting you from market risks.

2. Ideal for Large Sums of Money

CD accounts often require a minimum deposit of $500 to $1,000 or more. If you have a substantial amount of money, such as savings accumulated over years or an inheritance, a CD can be an excellent place to invest it. Larger deposits in high-interest CDs accumulate interest faster. For instance, a $15,000 deposit in a CD earning 5% interest would yield $1,577 in interest over a two-year term. While interest on CDs is subject to income tax, the earnings can still help you achieve financial goals like paying off debt or covering part of the closing costs on a new home.

3. No Immediate Access Needed

CDs are best suited for funds you don’t need immediate access to, as they tie up your money for a specific period. Withdrawing money early can result in penalties, typically a portion of the interest earned. However, this penalty can also serve as a deterrent, encouraging you to leave the funds untouched for your financial goals. Some banks offer no-penalty CDs, providing more flexibility if you’re not ready to commit to a regular CD.

4. Guaranteed Interest and Deposit Protection

CDs offer a low-risk way to save money, as banks guarantee a set amount of interest as long as the funds remain in the account until maturity. Unlike stock market investments, which can be volatile, CDs provide a stable return. Additionally, CDs come with deposit insurance, offering an extra layer of protection. Banks insured by the Federal Deposit Insurance Corp. (FDIC) or credit unions with National Credit Union Administration (NCUA) insurance cover up to $250,000 per account holder, ensuring your money is safe even in the unlikely event of a bank failure.

The Bottom Line

If your goal is to maximize interest on your savings, CDs can offer a better return than traditional savings or money market accounts. Explore the CD options available at O1ne Mortgage and compare rates to find an account that fits your financial needs. For any mortgage-related inquiries, feel free to call us at 213-732-3074. We’re here to help you make the most of your savings.

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