Many people also choose to put their money towards popular investment option that can guarantee financial growth with little to no interest risk known as a Certificate of Deposit (CD). A CD is very similar to a high-yield bank account because they will have a higher APY rate than standard bank accounts.
The best rated certificate of deposit APY rates are often offered at much better rates than most types of high-yield bank accounts. With these higher APY rates, certificate of deposit accounts are great choices for earning extra money while your money is safely held in your bank account for use in the future.
Note: Similar to high-yield bank accounts, certificate of deposit accounts will have specific restrictions on when money can be withdrawn.
Typically, when you initially open a certificate deposit you will agree to not touch any of the money in the account for a certain amount of time. In most cases, the money in a CD will not be able to be accessed for a few months to a year.
Some of the most notable benefits of signing up for a certificate of deposit include:
- High APY rates that can help your money grow faster over time.
- Increased payouts the longer the money is left untouched in the CD account.
- Money is saved for a specific period of time and can be a great method of saving.
Certificate of deposits that are created for a 5-year time period will have a higher interest rate than a CD made for shorter time frames like 1-year or 3-year CDs.