Are CDs Worth It?: A Savings Account Of The Past

Shawn Plummer

CEO, The Annuity Expert

It’s no secret that interest rates are at an all-time low. This has led many people to ask: are CDs worth it? The answer to this question depends on several factors, including how long you plan to keep your money invested and what kind of return you expect. In this guide, we will explore the pros and cons of investing in CDs and help you decide if they are right for you!

The Traditional Benefits And Drawbacks

CDs offer several benefits, including safety and predictability. When you invest in a CD, you know exactly how much interest you will earn over the life of the investment. This can be helpful if you are saving for a specific goal, like retirement. CDs also tend to be very low-risk, so they are unlikely to lose value.

However, there are also some drawbacks to investing in CDs. One of the biggest is that they often have meager returns. As a result, growing your money can take a long time if you only invest in CDs. Additionally, early withdrawal penalties can eat into your earnings, so you must be sure you won’t need to access your money before the CD matures.

So, are CDs worth it? Ultimately, the answer depends on your circumstances. CDs may be a good option if you’re looking for a safe investment with predictable returns if the alternative is sticking the money under your mattress. However, if you’re hoping to grow your money quickly, you may want to look into other options.

Why Do Banks Charge You Fees But Doesn’t Allow You To Earn Interest?

Banks charge customers fees for a variety of reasons. Some standard fees include monthly maintenance, account transaction, and ATM withdrawal fees. While these fees can be annoying, they are typically necessary to cover the bank’s costs.

Why is the interest owed on a loan much higher than the interest earned in a savings account, money market, or certificate of deposit?

The interest on a loan is usually much higher than the interest that could be earned in a savings account, money market, or certificate of deposit because loans are typically riskier for banks. When a bank lends you money, they are taking on the risk that you may not be able to repay the loan. To offset this risk, banks charge higher interest rates on loans.

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The Alternative

Fixed annuities work almost identically to certificates of deposit, with a few key exceptions. First, fixed annuities typically have higher interest rates than CDs. This means you can grow your money faster with a fixed annuity. Additionally, there are no early withdrawal penalties with a fixed annuity. The drawback is that fixed annuities are meant for retirement savings, not short-term income goals before retirement. Therefore, fixed annuities are a way better choice if you only want to save for retirement or spend the interest in retirement.

A fixed annuity may be the right choice if you’re looking for a safe investment that offers higher returns than a CD.

Earn The Highest Interest Rates On Savings Today

Fixed annuities are almost identical to Certificates of Deposit (CDs) accounts and provide higher interest rates and penalty-free withdrawals for income.

TermInsurance CompanyInterest Rate
N/AUFB Bank Savings Account5.02%
N/AUFB Bank Money Market5.02%
12 MonthsWestern Alliance Bank CD5.01%
36 MonthsOceanview Fixed Annuity5.00%
48 MonthsAmerico Fixed Annuity5.05%
5 YearsAspida Fixed Annuity5.50%
6 YearsAmerican National Fixed Annuity5.45%
10 YearsAmerican National Fixed Annuity5.45%
*Fixed annuities are only for saving money to use in retirement.

Disclaimer: This is a review. The Annuity Expert is not associated with a bank or credit union. However, fixed annuities are sold at most financial institutions. We aim to help you find the highest interest rates for your retirement savings. We may receive a small referral fee if you purchase something using a link in this article.

Find And Compare The Highest Interest Rates

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Next Steps

If you’re considering investing in a CD, shop around and compare rates before you commit. There are many different options out there, so you want to be sure you’re getting the best deal possible. Additionally, ensure you understand the CD’s terms and conditions before investing. Some CDs have early withdrawal penalties that can affect your earnings, so be sure to read the fine print!

Are Certificates Of Deposit (Cds) Worth It?

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Shawn Plummer

CEO, The Annuity Expert

I’m a licensed financial professional focusing on annuities and insurance for more than a decade. My former role was training financial advisors, including for a Fortune Global 500 insurance company. I’ve been featured in Time Magazine, Yahoo! Finance, MSN, SmartAsset, Entrepreneur, Bloomberg, The Simple Dollar, U.S. News and World Report, and Women’s Health Magazine.

The Annuity Expert is an online insurance agency servicing consumers across the United States. My goal is to help you take the guesswork out of retirement planning or find the best insurance coverage at the cheapest rates for you. 

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