If you’ve started wondering what else you could be doing with your savings, then there’s a good chance you’ve heard of a certificate of deposit (CD).

Many potential investors have a bad gut reaction to CDs. They’ll say that CDs don’t actually get you good returns, or that CDs lock your money up for too long. But contrary to these common misconceptions, a certificate of deposit can be a worthwhile investment strategy.

Myth #1: The low returns aren’t worth it.

A CD may not promise the same returns as a riskier investment account, but it does offer stability. CDs come with wide variety of rates – typically higher than your standard savings account – and once you’ve opened a CD, your rate is fixed for the duration. That means, no matter how the market fluctuates, you’ll earn interest and enjoy predictable savings growth.

Myth #2: CDs make your money totally inaccessible.

Most CDs do include penalty fees if you withdraw the funds before the term ends, but you have a lot of options. Terms can range from a few months to several years, and some investors choose to “ladder” their CDs by giving them different terms, which unlocks their funds a bit at a time. Our Flex CDs also allow you to add more funds at any time or withdraw funds once a month once you’re over a certain balance.

Myth #3: CDs are only for old people.

Certificates of deposit are a more conservative investment, which makes them appeal to older investors who want to safeguard their savings. However, CDs can also be a wise choice for younger savers who want to diversify their investment portfolio or otherwise increase their savings reliably.

How a Flex CD Changes Things

A traditional certificate of deposit works like this: You pick your term, you deposit money, and you leave it alone until it “matures” (reaches the end of its term). Once your CD matures, you can either roll the funds over into a new CD or withdraw them. If you try to access those funds early, however, you’ll likely face additional fees. Most CDs also don’t allow you to add funds in the middle of the term.

A flexible certificate of deposit is different. A Flex CD balances safety and flexibility, giving you the benefit of structured saving with room to adapt. Different financial institutions will have different conditions, but the main appeal of a flexible CD is the ability to make additional deposits over the life of the account.

At Security Federal Savings Bank, you can open a Flex CD with as little as $500. You can add to it over time – and once your balance is at least $10,000, you can make one free withdrawal per month. We know emergencies don’t usually wait for your CD to mature, so this feature can help you avoid the early withdrawal stress.

When a Flex CD Is Right for You

Everyone’s situation is different – but that’s exactly what makes a flexible CD appealing, too. Here are a few examples to consider.

• Scenario #1: Lucy has an online store for her crochet projects, and also has a few short-term and long-term goals for her savings. She opens a Flex CD to help her save for a dream vacation. The CD’s deposit flexibility allows her to contribute more funds whenever her store brings in extra income. At the same time, the funds she already has in the CD are earning dividends faster than a savings account, helping her reach her goal sooner.
• Scenario #2: Bruno has been working hard to build up his regular savings and chose a Flex CD as part of an emergency-friendly savings strategy. Over time, he’s managed to save over $10,000 in the flexible CD thanks to its competitive rate, stable growth and security. So, when his teenage son crashes the family car, Bruno is able to withdraw the funds he needs for repairs from the Flex CD without early withdrawal penalties or additional stress.
• Scenario #3: Kate does contract work for a living and opened a Flex CD as a reliable way to grow her savings. Thanks to her disciplined savings strategy and the ability to make deposits at any time, she accrues over $10,000. Then, her favorite musician announces a special concert with a once-in-a-lifetime opportunity for fans. Kate is able to use her hard-earned savings to take advantage of the opportunity, buy her tickets and afford the travel costs – guilt free.

As you can see, a flexible CD has a variety of uses, whether you have a specific goal or just want to bolster your savings. A Flex CD allows you to adapt to your current situation with ease, whether you need to add more funds, make a withdrawal or just give yourself more peace of mind.

Ready to Open a Flex CD of Your Own?

You won’t need a large upfront deposit – just $500 that you can build up over time. See more details on our Flex CD page or head straight to our online account opening form to get started. And if you need help going through your savings and investment options, we’re here for you!