A certificate of deposit (CD) is a low-risk savings account with fixed interest rates and withdrawal dates. In exchange for the higher interest rate, you commit to leaving the funds deposited for a fixed term. This is typically 12 to 24 months, but can sometimes be even longer.
Is a CD right for me?
If you find yourself with a surplus of funds, a CD might be the right fit. It can be a powerful tool to jump-start saving for goals, whether that’s homeownership, a new car, or even to help pay for your education further down the road.
Just remember that pulling your money from a CD early will often incur penalties or fees, eliminating any growth that has already occurred. For this reason, it’s best to set up a budget and save for unexpected expenses with a more traditional savings account, too.
Important CD Information
- Fees will reduce earnings.
- Interest is compounded daily and credited to your account quarterly on the anniversary date. Accessing funds from your CD prior to maturity will subject you to early withdrawal penalties.
- See all Varsity disclosures.
Explore CD options with Varsity
Brand-new students and seasoned savers alike can benefit from the unique advantages of a CD. If you have questions about what opening one up may look like, or if a CD is right for your financial goals, contact Varsity today. Need help setting up a budget to stay on track this semester? We can help with that, too.