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Growing Your Savings

Exploring the Benefits of Certificates of Deposit (CDs)

Savings, Financial Literacy | 3 min read | Updated: Jun 2023
Couple growing their savings. Learning more about Civista CDs and CD savings strategies.

Many of us are looking for ways to save our hard-earned cash. One option to consider is a certificate of deposit, or CD. CDs allow you to earn a guaranteed return on your investment over a set period. They come in a variety of terms, ranging from a few months to several years. Withdrawing your money before the CD matures usually results in an early withdrawal penalty which will usually cost you several months’ worth of interest depending on the term of the loan.  However, by promising to keep your money on deposit for the full term, CDs typically offer higher interest rates than traditional savings accounts, making them a smart choice for those looking to grow their savings.

Saving Strategies: Laddering and Rolling

Laddering and rolling strategies are two ways to achieve your savings goals. Laddering involves investing in multiple CDs with different maturity dates. This strategy allows you to have access to your funds at regular intervals, ensuring liquidity and flexibility. Additionally, as each CD matures, you have the option to reinvest it in a new CD with potentially a higher interest rate, maximizing returns over time.

Another advantage of laddering is that it allows you to take advantage of higher interest rates that may be available in the future. By investing in shorter-term CDs, you can take advantage of rising interest rates as they occur, while still having some money invested at a lower rate. This ensures that you are making the most of your savings and earning the highest possible returns.

Rolling over maturing CDs is another strategy that can help you maintain your savings momentum. Instead of withdrawing the funds when your CD matures, you can choose to renew your CD — rolling over the funds at the same term, but current interest rate. You can also reinvest the funds into a new CD with a term that fits your savings goal. Many financial institutions offer the ability to automatically renew CDs. This will allow you to continue earning interest on your funds and reach your savings goals faster without the temptation to spend your savings. Talk with your personal banker to find the right option and strategy.

Achieving Your Savings Goals

Whether you're saving for a down payment, planning for home improvements, or funding a dream vacation, CDs can be an excellent tool to help you achieve your long- and short-term savings goals. Start by determining the amount of money you need to save and the time frame in which you want to achieve your goal. With Civista Bank's CDs, you can rest assured that your funds are protected while they grow.

    • For example, if you want to save $5,000 for a down payment on a car in two years, you may want to consider a 24-month CD.
    • For short-term savings goals, such as planning for upcoming home improvements or updating appliances, a 3 to 6-month CD may be the right option for you.
    • For those looking to fund a dream vacation, a longer-term CD with a maturity date that aligns with your travel plans may be the best option — if you want to take a trip in three years, a 36-month CD may be the perfect choice.
Saving for the future with Civista CDs and CD savings strategies.

Saving for the Future

It's never too early to start saving for your long-term goals such as retirement or major life events like a child's education or a wedding. One advantage of CDs for long-term savings is the ability to lock in rates for extended periods. This means that even if interest rates decrease, your CD's interest rate remains the same. This can be especially beneficial when saving for retirement, as it allows you to plan a retirement budget with more certainty.

Another advantage of CDs is that they can help diversify your investment portfolio. While stocks and mutual funds may offer higher returns, they also come with a higher level of risk. CDs, on the other hand, are FDIC-insured and considered a safer investment option. By including CDs in your investment portfolio, you can mitigate risk and ensure a more stable financial future.

When choosing a CD term length, it's important to consider your savings goals and the interest rates available. Longer-term CDs generally offer higher interest rates but may not be the best choice if you need access to your funds sooner. On the other hand, shorter-term CDs may have lower interest rates but allow for greater flexibility and liquidity.

No matter your savings goals, Civista's CDs offer security and peace of mind, ensuring that your funds are protected while they grow. CDs are an excellent choice for savvy savers. Talk with your Civista banker today to learn more about Civista's current CD rates and term options.

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