What is a Certificate of Deposit (CD)

What is a Certificate of Deposit (CD) and How Does it Work?

What is a Certificate of Deposit (CD) and How Does it Work?

At 1st Ed Credit Union, we understand that saving money is a priority for our members. If you’re ready to give your savings an extra boost, a Certificate of Deposit (CD) might be a great option. CDs offer several advantages over traditional savings accounts. But first, you may be wondering… what is a certificate of deposit? How does a certificate of deposit work? As your trusted credit union in Pennsylvania, we are here to answer your questions so you can make the best decision for your financial goals and needs.

What is a Certificate of Deposit?

A CD is a type of savings account offered by banks and credit unions. When you open a CD, you agree to deposit a specific amount of money (your principal) for a predetermined period (the term). In exchange for committing your funds for this set timeframe, the money in a CD will grow at a fixed interest rate, typically higher than what you’d earn in a regular savings account. This means you can predict exactly how much your money will grow over the CD’s term.

Once the CD reaches its maturity date (the end of the term), you have a few options:

Ready to watch your savings grow faster? Open a CD with 1st Ed Credit Union today and lock in a competitive interest rate!

Benefits of a CD

While there are many savings options available, CDs offer several unique advantages that can benefit your financial goals:

Higher Interest Rates: As mentioned earlier, CDs typically offer significantly higher interest rates than traditional savings accounts. This means your money grows at a faster pace, helping you reach your savings goals sooner.

Security and Safety: Your funds in a CD are federally insured by the National Credit Union Administration (NCUA) up to $250,000 per depositor, similar to your savings account. This government protection provides peace of mind knowing your money is safe and secure, even if unforeseen circumstances arise.

Goal-Oriented Saving: CDs are an excellent tool for dedicated saving towards specific goals. Perhaps you’re dreaming of a tropical vacation, planning for a child’s college education, or aiming for a comfortable down payment on a house. With a CD, you lock away your savings for a set period, helping you resist the temptation to spend it elsewhere. This focused approach keeps you on track and motivated to achieve your financial objectives.

Variety of Terms: 1st Ed Credit Union offers a wide range of CD terms to accommodate your individual needs. Whether you have short-term goals or prefer a longer-term investment strategy, we have a CD option that fits your timeline. Terms typically range from a few months to several years, allowing you to choose the timeframe that best aligns with your savings plan.

Things to Consider Before Opening a CD

Interest Rates: Compare rates offered by different banks and credit unions to find the best deal. 

Since we are member-owned, 1st Ed Credit Union generally offers higher rates than competing banks. See our current CD rates!

Term Length: Choose a term that aligns with your savings goals. Consider how soon you might need access to the funds.

Early Withdrawal Penalties: Understand the penalties associated with early withdrawal to avoid potential loss of earnings.

Minimum Deposit Requirements: Some CDs might have minimum deposit requirements to open an account.

How Can a CD Fit into Your Financial Strategy?

CDs are a versatile tool that can be used in various ways to strengthen your overall financial health. Here are a few examples:

Building an Emergency Fund: An emergency fund provides a safety net for unexpected expenses like car repairs or medical bills. A short-term CD can be a great way to save for your emergency fund while still earning a competitive interest rate.

Saving for a Down Payment: The steady, predictable growth of a CD can be ideal for saving towards a down payment on a house. By choosing a CD term that aligns with your home-buying timeline, you’ll have the funds you need readily available when the time comes to make an offer.

Supplementing Retirement Savings: While retirement accounts like IRAs should be your primary focus for retirement savings, CDs can be a valuable supplement. Consider using CDs for short-term savings goals within your retirement plan, such as a buffer for unexpected expenses after retirement.

Opening a CD at 1st Ed Credit Union is Easy

At 1st Ed Credit Union, we are committed to offering our members competitive CD rates. We regularly compare rates in the market to ensure you’re getting the best possible return on your investment. Our credit union in Pennsylvania makes it easy to open a certificate of deposit online or at one of our local branches in Chambersburg, Hanover, and New Castle. 

Don’t miss out! Secure your future with a high-interest CD and start earning guaranteed interest today. 

Not a Member Yet? Joining is Fast and Easy! If you belong to any of these school districts or partner organizations in Pennsylvania, you are eligible for membership! Join now!

You are now leaving 1st Ed Credit Union

1st Ed Credit Union provides links to web sites of other organizations in order to provide visitors with certain information. A link does not constitute an endorsement of content, viewpoint, policies, products or services of that web site. Once you link to another web site not maintained by 1st Ed Credit Union, you are subject to the terms and conditions of that web site, including but not limited to its privacy policy.

You will be redirected to

Click the link above to continue or CANCEL