Two reasons to invest in CDs

A Certificate of deposit  (CD) is a type of federally-insured savings account that has a fixed interest rate and a predetermined date when you can withdraw funds, known as a maturity date. They are ideal for people who don’t want to risk losing the original money they invested (also known as principal).

Here are two situations when CDs may be more attractive than other forms of savings and investment.

As an investment during periods of market volatility

Nervous investors may find the CD an attractive investment vehicle when the short-term outlook for the stock market is uncertain. CDs are insured up to regulatory limits by the National Credit Union Association (NCUA), so you can’t lose the money you initially put into a CD, even if you withdraw early and have to pay a penalty.

Oregon State Credit Union CDs allow you to name a “Payable on Death” beneficiary. In the event of death, your beneficiary can redeem the CD without penalty before the CD matures.

As a way to save money

CDs are ideal for people who anticipate making a large purchase in the near future. If you plan to buy a vehicle in a year or two or make a down payment on a house, and you know you’ll need the funds, putting that money in a 12- or 24-month CD guarantees you’ll have the money when you need it, plus interest.

If you’ve tried saving money before but always end up spending it, investing in a CD can lock-in your money and discourage you from using it knowing you’ll have to pay an early-withdrawal penalty.

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