First of all, what is a CD?
It’s not the shiny music-containing disk of yesteryear that you may be envisioning. A CD, or Certificate of Deposit, is a type of savings account that has a fixed interest rate and a fixed withdrawal date (aka maturity date).
How is a CD different?
With a normal savings account, you can deposit and withdraw your money at any time. However, with a CD you agree to leave your money in the account for a set amount of time (the term length) and cannot withdraw the money without paying a penalty. As an incentive to leave your money in the account for a predetermined amount of time, the bank will give you a higher (fixed!) interest rate. Typically, the longer the term length, the higher the interest rate.
What does the Fed Rate Hike have to do with any of this?
Now is a fantastic time to start a new CD! Over the past several years, five-year term length CDs had annual percentage yields (APYs) of less than 1%. First Oak Bank is now offering great rates on five-year terms! If you aren’t sure you are ready to agree to a five-year term, First Oak Bank offers a wide range of options as low as 3 months. For more information click here or to open a new CD, please contact a First Oak Representative today!