If you're looking for an investment that protects your principle while giving you a higher return than traditional savings accounts, Certificates of Deposit (CDs) are a smart option. They are FDIC and DIF insured which means that your money is protected completely without limits. To help you decide whether a short-, medium- or long-term CD is right for you, compare your test score to the chart below.
CERTIFICATE OF DEPOSIT CHART
If Your CD Test Score is...
Under 70 points:
You need a lot of liquidity, so a CD may not be right for you. Keep accumulating money in an investment savings account, like a money market account.
70 to 80 points:
You need some liquidity, but you can afford to lock your money in for a short period of time. Choose a short-term CD that matures in 7 days to 12 months, and match the maturity date to your needs.
85 to 95 points:
You will probably require access to your funds within the next 12 to 24 months. Select a medium-term CD that matures in 1 to 2 years, and match the maturity date to your needs.
100 points or more:
You can afford to take advantage of the higher interest rates a long-term CD yields. Consider a CD that matures in 2 to 5 years, and match the maturity date to your needs.
