How to grow your money with a certificate of deposit

Opening a certificate of deposit - better known as a CD - can be a smart first step if you’re looking to grow your savings with confidence. And the best part? Once it’s open, your job is mostly done.

A CD rewards you for setting money aside and leaving it untouched for a set amount of time, called a “term.” Terms can be short, like six months or a year, or longer, like five years. The longer the term, the more interest you could earn.

If you’re curious how a CD fits into your savings strategy, here’s what to know—and how to choose one that supports your financial goals.

A CD works a little differently than a regular savings account. When you open an account, you agree to keep your money in it for a fixed period. In return, the bank pays you a set interest rate.

It’s a win-win if you’re not planning to touch the money for a while and you want a guaranteed rate of return.

One thing to note: taking money out early can lead to penalty fees. That’s why CDs are best for planned expenses down the road, like a vacation, wedding, or large purchase, not for everyday use or emergencies.

Learn how much you could save over 12 months with an initial deposit of $1,000 in an M&T CD, compared to leaving those funds in your savings account. 

Thinking about a certificate of deposit? Ask yourself these questions to make a smart, informed choice:

How long can you comfortably set money aside?

CD terms usually range from 6 months to 5 years. Think about when you’ll need the money. Shorter terms give you more flexibility. Longer terms might offer higher interest, but you’ll need to leave your savings put until the term ends.

Get tips about whether a one-year or five-year CD could work for your money goals.

What kind of CD is right for you?

Not all CDs are the same. Some options include:

• Traditional CD: Pays a fixed interest rate over a set term.
• No-penalty CD: Lets you withdraw early without fees (usually with a lower rate).
• Jumbo CD: Requires a larger deposit and sometimes offers a higher rate.

Also check the minimum deposit requirement. Some CDs start around $1,000, while others may require more.

Look for a CD that matches your savings goals and timeline. Some CDs pay interest regularly, while others pay it all at once when the term ends. Compare features and read the fine print.

CDs from M&T are FDIC-insured up to the applicable limits. So your money is protected, and you can have peace of mind.

See other frequently asked questions about CDs.

Plan for the maturity date

When your CD reaches the end of its term, it might automatically renew. Set a reminder to check in, so you can decide whether to renew it, transfer the money, or try something new.

Try CD laddering for flexibility

If you’re saving a larger amount, consider opening several CDs with staggered maturity dates. That way, some funds stay accessible while the rest keeps earning interest.

Avoid early withdrawal penalties

Think about your timing before committing funds to a CD. If you might need access sooner, a no-penalty CD or high-yield savings account could be a better fit.

Opening your first CD can be a simple, secure way to boost your savings and work toward your financial goals. It’s not a one-size-fits-all solution, but with the right strategy, a CD can be a helpful part of your savings toolkit.

Want to see how your CD could grow? Use our Savings Calculator Library to explore your options.

Still have questions? We’re happy to help you take the next step.