CD Savings

The Inner Workings of a Certificate of Deposit

A CD is an investment tool that many investors use in addition to their basic savings accounts and money market accounts. A certificate of deposit, either through an online banking source or "conventional" bank, earns interest. Sometimes a CD earns a much higher rate of interest than a regular savings account, making it a very attractive alternative.

The reason a certificate of deposit offers you a higher interest rate is actually a matter of dollars and sense. The institution you buy your CD from is allowed to use your money for a specified period of time. They can use it for lending or investing.

The ABC's of CD's

Here's a quick look at what a CD is and its potential benefits, especially when it is purchased through an online bank like iGObanking.com.

• Money in a CD is not liquid
• CD's have a set maturity date
• CD's are protected by the FDIC up to the maximum allowable limit
• Most CD's offer compounded interest
• CD's usually provide higher interest rates than ordinary savings accounts
• CD's are easy to purchase through online banks
• When purchasing CD's through an online bank the rates are usually higher
• Tracking CD's, rolling them over, etc. is made simple when purchased through an Internet Bank
• All Cds offer a Grace Period; a set time after maturity in which you must either withdraw the funds or the bank will rollover your balance into a new CD for the same term

Before you choose to invest in a CD or any other interest earning vehicle it is important for you to fully understand the risks involved. Early withdrawal penalties may apply to your CD. A penalty may be imposed for withdrawals before maturity:

• If your account has an original maturity of less than three months:
  The penalty imposed is the greater of:
  • 7 days interest on the amount withdrawn subject to penalty, if the withdrawal is made within the first six days after the deposit.
  • all interest on the amount withdrawn subject to penalty
• If your account has an original maturity of three months to less than one year:
  • The fee we imposed will equal three months simple interest on the amount withdrawn subject to penalty.
• If your account has an original maturity of one year or greater:
  • The fee we imposed will equal six months simple interest on the amount withdrawn subject to penalty.

In certain circumstances such as the death or incompetence of an owner of this account, the law permits, or in some cases requires, the waiver of the early withdrawal penalty.

It's easy to sign up for online banking. Go to iGObanking.com, member FDIC, to begin your Internet banking today or call us at 1-888-432-5890.