Thursday, November 10, 2016

3 Smart Ways To Use CDs

Growing Your Investments One Month At A Time

A Certificate of Deposit (CD) is a unique savings product that allows consumers to grow their funds according to fixed interest rates. They are sometimes referred to as "time deposits." When used correctly, these products can be a great way to improve your financial situation. Here are a few tried-and-true strategies from our local bank at the Lake of the Ozarks to help you maximize your investments with CDs.

How Certificates of Deposit Work

CDs are similar to savings accounts, but with some distinct differences. Unlike savings accounts, consumers who open a Certificate of Deposit agree to leave their money untouched for a specific amount of time. This time frame is generally 3 months, 6 months, 1 year, 2 years, 3 years, or even greater. In exchange for locking away a consumer's cash for a set period of time, CDs typically offer higher interest rates (and, therefore, higher yields) than regular savings accounts. Once their terms are up, consumers can access their original principal amount as well as their earned interest.

Smart Ways To Use CDs

Here are a few clever ways you can strategically leverage CDs to improve your financial situation.

1. Reinvest Your Earnings
Choosing what to do with your principal and your earnings once your CD matures is an important decision. One option is to reintegrate the funds back into your cash flow. Another option is to take your original principal and the interest earned and reinvest it in another CD. By continually reinvesting your earnings, you can help them grow exponentially.

2. Apply Your Earnings Towards A Debt
As you are surely aware, applying extra money towards the principal on your debts is a great way to pay them off faster and save money on interest. However, it can be hard to scrape together the extra funds to put towards these payments. CDs can help by promising a guaranteed return on your investment. When your CD matures, you will have extra money that you can apply towards a debt.

3. Start Small
Some millennials assume that CDs are not a good option for them because they cannot afford to set aside large chunks of money for extended periods of time. It may not be smart to lock a few thousand dollars away for more than one year, but many CDs offer terms as low as 3 months. Anything is better than nothing - there is no reason you can't start with short-term investments and work your way up to longer ones.

Contact First Bank Of The Lake For More Information About CDs

First Bank of the Lake is proud to offer very competitive rates on CDs at the Lake of the Ozarks. If you are interested in pursuing a safe investment opportunity, we would love to speak with you about our CD options. You can view our current interest rates on our website.* For more information about our CDs, visit us at or call us directly at (573) 348-2265.

*Rates subject to change without notice.

First Bank of the Lake - Striving For Excellence
Member FDIC. Equal Housing Lender.

Located at the entrance to the Osage Beach Premium Outlets!

4558 Osage Beach Parkway
Suite 100
Osage Beach, MO 65065

(573) 348-2265

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