{"id":13319,"date":"2025-12-03T16:41:37","date_gmt":"2025-12-03T22:41:37","guid":{"rendered":"https:\/\/www.discover.com\/online-banking\/banking-topics\/?p=13319"},"modified":"2026-02-03T17:01:55","modified_gmt":"2026-02-03T23:01:55","slug":"4-benefits-of-certificate-of-deposit","status":"publish","type":"post","link":"https:\/\/www.discover.com\/online-banking\/banking-topics\/4-benefits-of-certificate-of-deposit\/","title":{"rendered":"4 benefits of a certificate of deposit (CD)"},"content":{"rendered":"\n

Are you on the hunt for a secure way to grow your money? Although it may not be on your radar, consider the benefits of a certificate of deposit (CD). In a nutshell, a CD is a deposit account that runs over a fixed period of time. Designed as a safe and secure way to increase your rate of return, one of the benefits of a CD is that it grows your money regardless of what the market does. The interest earned on a CD is dependable, and it grows thanks to the power of compound interest<\/a>. Plus, your interest payment on a CD at maturity will often be higher than that earned in most savings accounts.<\/p>\n\n\n\n

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If you understand how CDs work<\/a> but want to learn how they can help you increase your savings, here are four benefits of a CD:<\/p>\n\n\n\n

1. CDs can be a safe choice<\/h2>\n\n\n\n

One key benefit of a CD is that it\u2019s typically a safe way to increase your savings rate of return. If you\u2019re skittish about the stock market or tying up money in bonds, you might appreciate the security of a certificate of deposit. The FDIC insures CDs up to the maximum amount regulated by law. Before you open a certificate of deposit<\/a>, confirm that your financial institution is FDIC insured so if it were to fail, you would know your money is protected.<\/p>\n\n\n\n

While having the FDIC on your side helps, CDs also come with further protections. One of the main benefits of a CD is that unlike stocks, where it\u2019s possible to gain or lose large sums all in one day of trading, the interest earned on a CD will allow your money to consistently grow.<\/p>\n\n\n\n

Andrew Denney, founder and CEO of a financial planning firm, says that a CD can be secure because in some cases, you can \u201ccash out and still get the principal.\u201d However, you should note that while your initial deposit can be safe, you may face an early withdrawal penalty that could eat into your interest payment if you cash out early. At times, these penalties could also impact your principal. (Skip to CD benefit #4 to learn more.)<\/p>\n\n\n\n

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2. CDs can have fixed rates for fixed terms<\/h2>\n\n\n\n

Financial markets can be volatile and returns for investments in the stock market or real estate, for example, can be unpredictable. Some years are fruitful, and others are\u2026 less so. But another benefit of a CD is that you can lock in a fixed interest rate for a set period of time. Unlike the sometimes roller coaster fluctuations of the markets, a CD grows dependably thanks to slow and steady interest.<\/p>\n\n\n\n

When you weigh the benefits of a certificate of deposit, there are three interest rate options to consider:<\/p>\n\n\n\n