CDs vs. Savings Accounts

If you’re sitting on a lump sum of cash in a traditional savings account and you’re reasonably sure you’re not going to need that money for a while, putting it in a CD could be just the thing for you. It almost certainly will allow you to earn more interest on that money. Depending on how long you want to tie up your money and the amount of your deposit, you might actually double the amount of interest you earn.

If the money in your savings account is your emergency account set aside as a hedge against job loss or illness, you might want to just leave that money in place. Perhaps you could start a new savings account with the idea of eventually investing that money in a CD.

Be sure the money you are putting into CDs is money you won’t need for unexpected expenses. Taking out a loan to address an emergency would almost certainly end up costing you far more in interest than you would ever earn on a CD.

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