2022 tax forms have been mailed and are also available in digital banking by selecting Documents & Statements, then Tax Forms & Notices. Click here to learn more.

5 Misconceptions About CDs

Planning Your Future Forming Money Habits

A certificate of deposit (CD), known as a certificate at credit unions, is a safe way to invest money for a fixed period of time at a specified interest rate.

There’s a lot CDs have to offer (and not only for those with money to burn). Interest rates have been on the rise as of late, so there’s no time like now to consider this investment option. Here are a few misconceptions you may have heard about CD investments—and reasons why you might reconsider this “set it and forget it” way to earn.

Couple hiking near the ocean

Myth #1: They're only for people with a lot of money

You don’t need a six-figure salary to invest in a CD. Most credit unions and banks offer CDs starting with as little as $1,000 or even $500.

Myth #2: They'll tie up my money for too long

You can open a CD with a commitment as short as six months. (See SELCO's current rates.) Of course, if you won’t need your funds that soon, you’ll earn a higher interest rate with a longer term. Even in a worst-case scenario, if you need to withdraw the money before the maturity date, you can. You’ll typically give up a few months’ worth of accrued interest as a penalty, which will only impact your principal if you opened the CD very recently.

Myth #3: They're risky

Unlike the stock market, your certificate balance is insured by the FDIC (banks) or NCUA (credit unions) for up to $250,000. That’s about as safe as it gets.

Myth #4: They aren't profitable

Sure, a CD won’t give you the high returns of a game-changing stock purchase, but your earnings are guaranteed (no matter how the market fares). They can be a great way to earn interest while saving for a longer-term goal, like a wedding, major vacation, or down payment on a home.

Myth #5: I'd be better off keeping my money in savings

Only if you’re likely to need the money within six months. Otherwise, unless you’re earning an extraordinary return on a savings account (the average rate today hovers around .05%), you’ll earn significantly more interest with a CD. Plus, with a CD, you won’t be as tempted to spend what you’ve worked so hard to set aside.

The Latest in Offers and Features from SELCO

Man standing at a crossroads.

Student Loan Relief: Keep Paying or Hit Pause?

A student loan forbearance has been in place for a few years now. The federal government also is attempting to forgive up to $10,000 per borrower. With all this relief, do you pause your payments or temporarily make interest-free payments?
Two Jars Filled With Change

4 Ways To Watch Your Savings Grow

Conventional savings accounts offer the easiest access to funds but the lowest interest rates. Don't overlook certificate, money market, and health savings accounts as alternatives.

Common Savings Terms (and What They Really Mean)

There are a lot of terms out there that deal with "savings." What do they all mean? Gaining an understanding of how terms, like the ones we go over in this glossary, work together will clear a path forward for making the most of your money.
Contact Us