Unveiling the Truth Behind Certificates of Deposit: Breaking Down Misconceptions and Beliefs

Debunking Top Misconceptions About CDs

Which of these big misconceptions have you heard about CDs? Let's demystify certificates of deposit -- and see if opening a CD is right for your money goals.

1. "CDs are always better than a savings account"

• The truth about CDs: High-yield savings accounts sometimes have higher APYs than the best CDs. And savings accounts don't make you lock up your money; you can access your cash anytime without penalty.

2. "CDs work the same way as a savings account"

• The truth about CDs: Sometimes CDs can be a better choice than a savings account. But you have to be willing to commit your money to a CD for a certain amount of time.

3. "Only people with lots of money can open a CD"

• The truth about CDs: Many of the best CDs have low (or zero) minimum deposit requirements.

4. "CDs are a good long-term investment"

• The truth about CDs: CDs should not be considered a long-term investment for most people's goals. Invest more aggressively if you want bigger growth.

Bottom line: Certificates of deposit (CDs) provide fixed rates of interest for a guaranteed length of time. Consider all factors before deciding between CDs and high-yield savings accounts for your financial goals.