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Is a Certificate of Deposit (CD) right for you?

With interest rates high, now is a great time to consider adding a CD to your financial portfolio.

You shouldn’t expect to become fabulously wealthy by opening a Certificate of Deposit (CD). But if you’re looking for a safe place to earn a guaranteed return on your savings, right now is a great time to consider adding a CD to your financial portfolio. With interest rates rising, many CDs are paying the highest rates consumers have seen in more than 20 years.

How is a CD different from an ordinary savings account?

In simple terms, a Certificate of Deposit is a type of savings account—one that pays higher interest on your balance in exchange for your promise not to withdraw any funds for a set period of time, which at Vibrant can range from 3 months to 5 years.

Right now, if you deposit $5,000 in the average savings account, you can expect to earn about $30 in interest after 13 months, provided you don’t make a withdrawal. But if you put that $5,000 in Vibrant’s 13-month CD, currently paying 5.00% APY (that stands for "Annual Percentage Yield"), you’ll earn about $270 in interest over the same period, provided you don’t withdraw the funds before the certificate’s maturity date.

Further, so long as your deposit balance doesn’t exceed NCUA insurance limits ($250,000 in total deposits per account holder at a single credit union), those returns are guaranteed so long as you don’t need to withdraw your cash early—and it never hurts to have an extra level of assurance considering recent volatility in the banking sector.

Talk to us if you’re interested in depositing more than $250,000 for cost-free strategies for maximizing your deposit insurance coverage.

The kinds of people who should consider investing in a CD

If your current financial goals fall into any of the following categories, a CD might be the right solution for you.

You’re saving for a short-term goal

If you’ve been setting aside money for a down payment on a home, a new car or boat, a dream vacation, or a wedding, then putting your savings in a CD is a good way to grow your nest egg faster without committing to a long-term investment.

You want to jump-start your retirement savings

Even if retirement is a long way off, you can invest in an IRA CD at any age—and, right now, potentially earn a better rate of return than you would through your 401(k). With an IRA CD, your investment itself is tax-deductible (similar to the way that 401(k) contributions are made with pre-tax dollars). And, unlike a conventional CD, an IRA CD enables you to put off paying taxes on the interest income you earn until it’s time to make a withdrawal from your retirement plan. You can even roll over your IRA into a different retirement savings plan without tax penalties once your 401(k) starts earning more.

You want to protect your cash against inflation

When inflation is high, the value of your savings decreases. Putting your savings into a CD can help protect your money by locking in a fixed interest rate until the economy improves.

You want a safe and secure place to park your savings

CDs are a low-risk way to grow your money. The interest rate is fixed, so you know exactly how much money you will earn. Further, Vibrant CDs are insured by the NCUA, which means your money is protected up to $250,000 per account holder (and you can talk with a banker about strategies to maximize your NCUA coverage if you want to invest more).

You want a great rate but don’t have a lot of money to invest

While many financial institutions require a minimum deposit amount in the four figures to get their best CD rates, all of Vibrant’s CDs are available with a minimum $5 deposit.

The bottom line

Before you put your savings in a CD, think carefully about when you will need to access the money you’re setting aside. All financial institutions charge some kind of early withdrawal penalty if you need to close a CD before it reaches maturity—up to and including giving up all the interest you’ve earned to date.

Once you decide how long you can afford to set aside your savings, compare your options to find the term and interest rate that work best for you. See Vibrant’s current CD rates, then reach out to one of our personal bankers for help opening an account or open an account online.


Before you open a Certificate of Deposit, be aware that there may be penalties imposed if you withdraw your money before the end of the term. Unless you specify otherwise, Vibrant's certificates will automatically renew at the end of the term—the 13-month CD automatically renews into a 12-month CD at maturity. Vibrant will contact you before your CD reaches maturity to help you choose not to renew or if you'd prefer to renew for a different term.

All Vibrant CDs are federally insured by NCUA.

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