There are plenty of CD advantages, mostly around security and predictability. They include:
A fixed interest rate
When you open a CD, you decide exactly how much you want to invest and how long to invest. Many banks allow you to open a CD account online. In exchange for keeping your money in the account for the time agreed, you receive a fixed interest rate.1
Higher returns
Those average rates are typically higher than you’ll receive in a traditional savings account.2
Predictable returns
Unlike other investments, CDs are considered one of the safest savings options.1 There’s no question of how it will perform or how long you’ll keep it. You’ll invest a specific amount at a locked rate for a specific amount of time.
Interest options
Often people assume the interest earned on a CD can only be collected once it fully matures. However, many banks allow customers to choose to receive the earned interest more often—either monthly, every six months or annually.1
Ladder options
A CD ladder is an investing strategy in which customers invest in CDs of increasing lengths—1 year, 2 years, etc. This lets investors tap into their money along the way while keeping some of it invested for a longer period.
Security
One of the biggest CD benefits is security. Like checking and savings accounts at federally insured banks, CD accounts are insured by the Federal Deposit Insurance Corporation, FDIC for short, up to the allowable limits.1
