Certificates of deposit provide a secure way to earn more on savings for long-term goals.  

One way to reach long-term business goals is to put a long-term savings plan into place. Business certificates of deposits are a low-risk investment for growing your savings.

How business CDs work

A business CD works just like a personal CD: you make a deposit and agree not to touch it for a set period of time in exchange for earning a higher interest rate than a standard savings account.

Terms for Consumers CDs range from six months to five years. If you take the money out of a CD early, there is typically a penalty. However, CDs are a great way to invest without taking big risks.

The amount of interest earned depends on two variables: how much you deposit and how long until the CD matures. (The maturity date of a CD is when you can withdraw the money without penalty.) The more you deposit, and the longer the term, the higher the rate will be. Longer terms typically earn better rates.

At Consumers, you can get a business CD with a minimum deposit of $1,000. And, your money is NCUA insured up to $250,000.

Laddering to grow your investment

Many business owners “ladder” their CD investments. This means instead of investing a single sum of money in one CD, they divide the sum and invest in multiple CDs with varying maturity dates. Think of each maturity date as a rung on a ladder; as you go up, terms are longer and the interest is higher.

A laddering strategy provides two key benefits. First, some portion of the money is available sooner as CDs with shorter terms mature. Second, if interest rates go up, you can reinvest those funds in a higher paying CD.

Here’s how you can build a CD ladder. Let’s say you have $5,000 to invest. You could split that sum in to five equal parts. Then, you’d open five CDs like this:

• $1,000 in a one-year CD
• $1,000 in a two-year CD
• $1,000 in a three-year CD
• $1,000 in a four-year CD
• $1,000 in a five-year CD

At the time of this writing, one-year CDs were earning 0.30% APY. Five-year CDs were earning more than three times as much with a rate of 1.01% APY. You can see how this strategy pays off! (Check out current rates.)

Over the next five years, laddering allows you to access part of your principal each year as the CDs mature. If you don’t need access to money at maturity, you can reinvest in another CD.

Open a business CD today

Opening one or more Consumers business CDs is easy—just contact one of our commercial loan officers.

Do you have business banking questions? Contact our knowledgeable commercial loan officers online or call 800-991-2221. We’re also available to help in person at your local office.

APY = Annual Percentage Yield. Federally insured by NCUA