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Saving money is an important part of financial planning, and at times it can seem overwhelming when considering all the savings options available. Two of the most common types of savings accounts are CDs and regular savings accounts. What does CDs stand for? CDs stand for Certificate of Deposits. While both offer unique ways to save, there is a distinct difference between CD and savings account. Although they have similar services and objectives, they differ in some foremost ways: the type of interest rate they offer, when the money can be accessed, and within what time frame you must commit funds to maximize earning potential. With regards to how to purchase CDs, or how to start a CD, it is easy; simply choose an amount, term length, and type from the options offered by your bank. CDs typically require a minimum balance and a fixed amount that needs to remain untouched for a predetermined duration while savings accounts do not have such conditions. Liquid CDs allow you to make withdrawals without incurring a penalty. Savings account vs. Certificate of deposits? Let’s take a closer look.

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00:08 Certificate of Deposit
00:23 Savings Account
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Savings account vs. Certificate of deposits can be quite a tricky decision for those looking to grow their money safely and securely. When it comes to smart saving strategies, comparing the difference between CD and savings account can be quite beneficial. At first glance, the biggest distinction is that a traditional savings account money stuck for a set time while a CD allows you to set up a fixed time that is agreeable to you. With such a time frame established, you have the power to decide how long your money remains within your savings account before it's accessible for withdrawal or reinvestment. A Bank certificate of deposit interest rates is a great way to save your money securely and earn a competitive interest rate. While CDs offer security with investment certificates, there are risks associated with those that have long-term commitments such as inflation risk and the penalty for withdrawal before the maturity date. To minimize long-term certificate of deposit risk, keep an eye on changing interest rates and buy shorter terms when rates are low.

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It is important to understand the difference between CD and savings account when making financial decisions. Savings accounts typically offer low-interest rates but provide more liquidity and flexibility, while CDs tend to have higher interest rates, yet they require you to lock in your money for a predetermined period. Savings account vs. certificate of deposits, both have their advantages and drawbacks, so it’s essential to know the difference between CD and savings account and weigh up which one will better serve your financial goals. Furthermore, if both options seem suitable for your needs, then it might be worth investing in both products as part of an overall approach toward savings. If you’d like more detailed information about which option might work best for you, Central Bank Savannah TN can help. Call us at 731-925-9046 for more information. Visit CentralBankTN.com.