With interest rates still at some of the highest levels in recent years, many savers are looking for a secure way to grow their money. A Certificate of Deposit (CD) offers guaranteed returns with no market risk, making it a reliable savings option. At Minnesota First Bank, we’ve helped customers build their financial future with competitive CDs designed for stability and growth. CDs are a safe and reliable way to increase your savings, but they differ from a regular savings account. Let’s look at how they work and whether now is a good time to open one.
What Is a CD?
A CD is an account that helps you save money for a set amount of time. When you put money into a CD, you agree to leave it there for a certain period, called a term. This term can be as short as three months or as long as five years. In return, the bank gives you a fixed interest rate, which means the rate won’t change until your CD matures.
CDs are a great option for people who don’t need to use their money immediately. They are protected by FDIC insurance at Minnesota First, which means your savings are safe up to $250,000. Unlike a regular savings account, you can’t take money out of a CD early without paying a fee. That’s why choosing the right term for your needs is important.
Is Now a Good Time to Open a CD?
The best time to invest in a CD depends on your financial goals and interest rate trends. Although rates have softened slightly, they are still among the highest in recent years. Locking in a long-term CD can help secure today’s strong rates before potential future declines. Minnesota First currently offers mid-term CDs at 4% or higher, providing some of the best CD rates available for secure savings. If you want to lock in a substantial rate before interest rates change, now might be the right time to open a CD.
CDs work best for people who have a specific savings goal. If you are saving for a down payment on a home, an upcoming wedding, or college tuition, a CD can help you keep your money safe and earn interest while you wait to use it. Since the rate will not change once you open the CD, you don’t have to worry about interest rates going down in the future.
Before you open a CD, consider how soon you might need the money. If you need access to your savings within the next year, a high-yield savings account may be a better option. CDs are best for people who already have an emergency fund and don’t need immediate access to their money.
Minnesota First’s CD Options
As a trusted local bank, Minnesota First offers CDs with different terms, so you can choose one that works best for you. Our standard CDs start with as little as $500, while our special CDs start at $5,000. We offer terms ranging from three months to five years, and your money continues to earn interest even during the 10-day grace period after your CD matures.
If you open a CD with a term of less than 12 months, your interest will be paid at the end of the term. Interest is credited quarterly if your CD lasts 12 months or longer. You can also receive interest checks if your term is over 12 months.
One important thing to remember is that there are penalties for taking money out early. The interest penalty is three months if your CD is 12 months or less. If your CD is longer than 12 months, the penalty is six months’ worth of interest.
How to Choose the Right CD for Your Needs
The right CD term depends on your financial goals. A short-term CD (3-12 months) is ideal if you may need access to your money soon, while a medium-term CD (1-3 years) balances accessibility with competitive rates. If securing the highest possible return is your priority, a long-term CD (3-5 years) may be the best choice.
Another smart way to maximize your savings is through CD laddering. This strategy involves splitting your investment into multiple CDs with different maturity dates. For example, instead of placing all your money into a single 3-year CD, you could divide it among a 6-month CD, a 1-year CD, and a 3-year CD. This approach allows you to take advantage of higher interest rates while keeping some of your savings available sooner.
CDs are a great option if you want a guaranteed return and don’t need immediate access to your funds. However, because early withdrawals come with penalties, it’s important to consider whether you’ll need your money before the term ends. If you need quick access to your savings, a high-yield savings account may be a better alternative since it allows you to withdraw funds anytime.
Before opening a CD, think about your financial goals and how soon you may need your money. If you’re unsure which CD term is best for you, Minnesota First can help you choose the right option for your needs.
Is a CD the Right Investment for You? Let’s Talk!
CDs are perfect for people who want to save money without taking risks. They offer security, steady growth, and guaranteed returns. If you’re looking for a short-term savings option or a long-term investment, Minnesota First can help.
Opening a CD is simple. You can check our current rates online, download our CD Account Checklist, or visit your nearest Minnesota First branch.