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By: Ikedi Ani-okoye

Certificate of Deposit Vs Savings Account

Investing your money, and saving money, can be considered the same things. A good method of investing money, is to open a certificate of deposit account, this account offers high interest and low risk.

Basically what a certificate of deposit account is, is an account which has a fixed period on it. What this means is that you will not be able to withdraw your money, until that period is up. In return for your money, the bank or institution will give you a high interest on the money.

There are a number of pros and cons, when it comes to investing money in a certificate of deposit account:

Certificate of deposit account and savings accounts are for the most part risk free investment strategies. Both of these types of account, are insured, which means that if the bank goes bust, you don't go bust. You will be hard found to find investments which are risk-free like this anywhere else.

Comparing a savings account and certificate of deposit account, is basically, letting you know that a savings account, will allow you to take your money out of it whenever you want. Whereas a certificate of deposit account, will often hold onto your money from anywhere between three months to 5 years before you can use it again. Banks will often offer you a high interest rate, on money as long as you leave it in their bank for a allocated period.

Which account to choose

When saving your money, choosing between a single account, and a certificate of deposit account, will depend on you. If you want a long-term investment, that you are sure you are not going to need for a while, a traditional deposit account is best. If you are in the business of investing, and you just need a high interest account where you can flexibly use your money, then a savings account should be better.