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Understanding Certificates of Deposit (CDs): A Safe Investment Choice

by | Aug 20, 2025 | Credit Union

An overhead photo of a wooden desk with a stack of papers, on which a document is visible with the bold, large text "CERTIFICATE OF DEPOSIT." A white piggy bank and a pair of glasses are in the top left, and a pen is at the bottom left. The objects are arranged to suggest financial planning or savings.

No matter who you are, you want to keep your assets safe. While stocks and other investments can be important parts of your portfolio, they also come with varying – and sometimes significant levels of risk. In the end, it can be a great idea to keep some of your money in accounts that provide guaranteed returns. Certificates of deposit (or CDs) can be a very strong option for this, but a recent Forbes study indicated that 41% of Americans had never used them. What is a certificate of deposit, and how can you best use one? At Alliance Catholic Credit Union, our competitive CD rates and expert guidance can help you make the most of your money.

How Certificates of Deposit Work, and Current CD Rates

CDs work a bit like savings accounts. With a certificate of deposit, you make a deposit with your financial institution, and they will hold onto the money for a predetermined period. At Alliance Catholic Credit Union, we offer terms from three months to five years. At the end of the term, you will receive the entire amount back, plus a fixed amount of interest. The interest rate is typically higher than you can get with a savings account alone.

Fixed Terms and Guaranteed Returns

The term of a CD is an important consideration, as any money you place in a CD will generally be unavailable to you before the term expires. Longer-term CDs tend to offer higher interest rates and better returns, although this can vary. Our advisors will be glad to help you find the best rates, no matter when you open your CD.

Comparison with Traditional Savings Accounts

There are a few key differences between a certificate of deposit and a traditional savings account. They also have a lot in common. Here’s a quick comparison of the two.

Certificates of Deposit:

  • Fixed interest rate
  • Penalty for early withdrawals
  • Higher guaranteed returns
  • Insured up to $250,000
  • Often require a minimum deposit

Traditional Savings Accounts:

  • Variable interest rate
  • Flexible withdrawal/transfer options
  • Lower guaranteed returns
  • Insured up to $250,000
  • Rarely requires a minimum balance

NCUA Insurance Coverage for Peace of Mind

Unlike traditional investments, certificates of deposit are insured up to $250,000. This means that no matter what happens, you know your money will be safe.

Contact us at Alliance Catholic Credit Union to learn more about Certificates of Deposit

If you’re interested in learning more about certificates of deposit or any of the other services we offer at Alliance Catholic Credit Union, we’d love to meet you! You can contact us over the phone or feel free to visit any of our branches.

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