Unlock Higher Savings: The Ultimate Guide to Certificates of Deposit (CDs)

Read the transcript below or watch the YouTube video above for more information.

Transcript:

My name is Corey Nischan, and I am the online branch manager and an assistant vice president.

A certificate of deposit is a type of account that typically earns a slightly higher interest rate in exchange for the customer agreeing to keep those funds on deposit for a certain length of time. Our customers typically choose a certificate of deposit because they offer a slightly higher interest rate, and the earnings are guaranteed over the life of the term.

The FDIC offers insurance for each individual depositor up to $250,000. That’s important because it offers peace of mind to our customers. In the rare event that banks struggle, those funds are recoverable. Customers are also able to increase their FDIC insurance by adding joint account owners and beneficiaries to their accounts. FDIC insurance provides peace of mind to our customers by providing at least $250,000 of insurance coverage for their accounts.

You can add additional coverage by adding beneficiaries or joint owners to an account, and that peace of mind is invaluable for our customers. Interest rates are chosen at the bank’s discretion based on the bank’s needs and current market conditions. Now, interest rates are guaranteed from the first day you submit that application until your CD matures, without any changes during the duration of the term.

You’re not able to extend a CD with the same rate upon maturity. The interest rate is going to be determined by the current interest rates in effect on that date. The best term for a certificate of deposit really comes down to an individual’s needs. We offer a wide variety of CDs, anywhere from a single month up to many, many years, and you’re going to have full knowledge of the interest rate that’s available to you for any of those terms at any given time.

At the end of the CD’s maturity, there are several options available to our customers. They can choose to close the account and redeem the proceeds. They can choose to let that CD simply roll over for the same term at the new interest rate that’s in effect that day. You also have a ten-day grace period where you can add funds, withdraw funds, or modify the term of that certificate.

One of the common success stories that I see with our customers really benefits those customers that are in their retirement years. When you invest money in a certificate of deposit, that interest rate is guaranteed for the life of the certificate. That means the earnings on that money are also incredibly predictable. I see a lot of customers have that interest earning sent to them on a regular basis, typically quarterly, and they can use those earnings as a predictable part of their day-to-day living expenses.

There are always people available to help with questions about certificates of deposit. We have people available every business day from 8:00 AM to 5:30 PM Eastern Time. There’s a group of people ready to answer all of their frequently asked questions. Our website is a huge resource of information, too. If people are curious, they can go there, look at the frequently asked questions, and if we don’t answer it there, they can get on the phone and talk to one of our experts.

You can visit any of our local branches here in the state of Michigan. We have branches in East Lansing, Traverse City, and Grand Rapids. Our national footprint is available to anybody in the U.S. by going to our website and visiting the opening section of our website.

CD Laddering is a technique that a lot of our customers use to make funds available on a predictable schedule. Often you’ll see customers maybe open a one-year CD, a two-year CD, or a three-year CD, and so on. Every year they’re going to have a CD come into maturity, and then they can decide the best way to utilize those funds as they become available.

In fact, I had customers that came and visited me the first Monday of every month for a year. They opened a new certificate of deposit, and then the next year they came in on the same schedule to add funds to each certificate that they had opened, or to change the term or modify things as they needed. We build long-standing relationships with customers. With CD Laddering, it’s really advantageous for them and it’s really easy for us to do for them.

Even our online customers will tend to see them open clusters of accounts, often for different terms. So they have different amounts of funds available at different time periods depending on what their next few years look like.

You can add to it, close it, and redeem the funds. You could do it where you open one CD every month. For example, if you opened one CD every month, and each of those CDs was a 12-month CD, that means next year, every month, you’re going to have a CD come to maturity that you have flexibility with. That’s one option for CD Laddering.

Another would be if you want to have funds available in one year, two years, three years. You could go in on one day and open multiple accounts for different terms, and then you’d have those funds available on a really predictable schedule. It tends to be either customers that want something available every month or customers that want something available every year, and there are ways to accomplish both of those.

Our CD rates are subject to change without notice, based on the bank’s needs and market conditions. However, we always keep our most up-to-date interest rates available online. On any given day, you can check there and see exactly what our interest rates are for all of our terms.