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What Is a Certificate of Deposit (CD)?

Are you looking for a way to build up your savings? A Certificate of Deposit (CD) allows you to lock your money away for a term and offers higher yields than typical savings accounts. At Community West Credit Union, our CDs are ideal for people throughout West Michigan who want to bolster their savings nest egg without taking on much risk.

So, What Is CD Laddering?

CD laddering is a savings strategy that involves buying multiple CDs that mature at staggered terms. CD laddering provides greater flexibility to access your funds and is a beneficial strategy for navigating ever-changing dividend rates.

Benefits of CD Laddering:

  • Liquidity: Staggered mature dates mean your money is more accessible.
  • Flexibility: Take advantage of higher rates on shorter-term CDs while having some funds earn predictable interest rates for longer terms.
  • Better Dividend Rates: If dividend rates rise, you can reinvest the money from shorter-term CDs into new accounts and lock in higher Annual Percentage Yields (APYs)*.

How to get started with CD ladders

Step 1: Determine How Much You Want to Invest

Once you calculate the amount you want to invest, you can “build your ladder” with however many rungs you choose. If you plan to move money from your savings account to a CD, consider reserving enough in your savings account for an emergency fund. There usually is an early withdrawal penalty if you need to withdraw funds before the CD’s maturity date.

Step 2: Structure Your Ladder

Now, it’s time to build your CD ladder strategy. Let’s say you want to build a five-year CD ladder with five rungs. If you have $2,500 to invest, you might divide the funds equally into five CDs with different maturity dates. Community West Credit Union offers terms between three to sixty months.

 

Rates effective as of today.

DESCRIPTION RATE APY*
6 – 11 Month CD 3.94% 4.00%
12 – 17 Month CD 4.18% 4.25%
18 – 23 Month CD 4.18% 4.25%
24 – 35 Month CD 3.94% 4.00%
36 – 47 Month CD 3.70% 3.75%
48 – 59 Month CD 3.46% 3.50%
60 Month CD 3.46% 3.50%
Explorer (Youth) CD: 12-month term 4.43% 4.50%

*APY = Annual Percentage Yield. Rates Subject to Change. Penalty may be imposed for early withdrawal.
Charges may reduce earnings on the account. Click here for the Schedule of Service Charges.

Step 3: Cash Out or Reinvest

As each CD matures, you can cash out or continue to build your ladder by reinvesting the funds into a new CD with a higher yield or your preferred term. Continue the process for as long as you want to maintain the CD ladder. Also, you can let the CD automatically renew with the same term. (Note—the rate at the time of renewal may differ.)

Using our CD calculator, you can plug in different deposit amounts, rates, and terms to help estimate what you’ll earn at the end of a CD’s term.

At Community West Credit Union, we offer great rates and better service. You can start a CD for as little as $500* with terms of up to 5 years.

 

Rates effective as of today.

DESCRIPTION RATE APY*
6 – 11 Month CD 3.94% 4.00%
12 – 17 Month CD 4.18% 4.25%
18 – 23 Month CD 4.18% 4.25%
24 – 35 Month CD 3.94% 4.00%
36 – 47 Month CD 3.70% 3.75%
48 – 59 Month CD 3.46% 3.50%
60 Month CD 3.46% 3.50%
Explorer (Youth) CD: 12-month term 4.43% 4.50%

*APY = Annual Percentage Yield. Rates Subject to Change. Penalty may be imposed for early withdrawal.
Charges may reduce earnings on the account. Click here for the Schedule of Service Charges.

Disadvantages of CD Laddering

  • Reduces liquidity: CD laddering provides more flexibility than a single CD, but there is still a fixed period that you don’t have access to funds.
  • Inflation: CD rates are typically higher than savings account rates but generally do not keep up with the inflation rate.
  • Early withdrawal penalties: If you withdraw money from your CD before maturity, it will most likely come with a penalty fee.
  • Dividend rate fluctuations: As dividend rates rise and fall, you might reinvest the money from a matured CD into lower rates.
  • Lower returns: Our CDs are federally insured by the NCUA. That guarantee is generally associated with lower returns than higher-risk investments.

How to Open a CD at Community West Credit Union

Looking to take advantage of great CD rates as a part of your savings strategy? Consider opening a CD with Community West Credit Union. We offer competitive rates and will help you every step of the way, whether you open one CD or build a CD Ladder. You can contact us, or visit one of our locations in Comstock Park, Grandville, Hudsonville, Kentwood, Middleville, and Rockford to speak with a financial advisor.

Community West Credit Union serves Allegan, Barry, Ionia, Kent, and Ottawa counties.

*Annual Percentage Yield (APY) assumes principal and dividends remain on deposit for the certificate term. Dividends are compounded daily. Penalty may be imposed for early withdrawal. Fees may reduce earnings on the account. Offer may be withdrawn at any time.

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