Saving money is an essential part of a healthy financial journey. It builds financial security, prepares you for unexpected expenses, and supports long-term goals like buying a home, starting a business, or retiring comfortably.
Saving creates a strong safety net by reducing reliance on debt and offering greater decision-making flexibility — especially when income is uncertain or costs rise unexpectedly.
There’s an endless list of reasons why saving money is important. So, what’s the best way to do it? Let’s look at two popular methods: savings accounts and certificates of deposit (CDs).
What Is A Savings Account?
A savings account allows you to store away funds that aren’t used for everyday purposes, such as for a rainy-day fund or specific, short-term goals. You can earn interest (usually a small percentage) on your balance.
What Is A Certificate Of Deposit (CD)?
A certificate of deposit is a type of savings account that secures your money for a specific period of time (3 months, 18 months, etc.) in exchange for a higher, guaranteed interest rate. These rates are fixed and are typically better than those of a regular savings account.
When that duration has finished (also known as the CD’s 'maturity'), you can reclaim your deposit and the interest it earned, or roll it over to a new CD to keep the earnings going. If you remove your money from the CD before it has matured, you can be penalized with an early withdrawal fee.
Key Differences Between CDs & Savings Accounts
| Feature | Saving Accounts | Certificate Of Deposit (CD) |
|---|---|---|
| Liquidity | High liquidity, can withdraw anytime (some limits may apply) | Low liquidity, funds are locked for a set term |
| Interest Rates |
Lower, variable rates for a variable return | Higher, fixed rates for a guaranteed return |
| Access To Funds | Easy access via ATM, online banking, or at a branch | Penalty for early withdrawal before maturity |
| Flexibility | High, can add or withdraw funds at any time | Low, has a fixed term and deposit amount |
| Minimum Balance | Often low or none | Usually requires a higher minimum deposit |
| Typical Term | Ongoing | Variable, can range from 3 months to 5 years or more |
| Best For | Emergency funds and short-term savings | Long-term savings you won’t need access to immediately |
| Risk | Interest rate may not keep up with inflation, your money could lose purchasing power over time | Unaffected by market volatility, making them appealing for conservative investors |
| Taxable | Interest is taxable as income | Interest is taxable as income, even if you don’t withdraw until maturity |
| Ease Of Use | Most can be opened and managed online | Most can be opened and managed online, but some may require a phone call or branch visit to open |
| Fees | Typically, low/no maintenance fees | Low/no maintenance fees, but early withdrawal fees may apply |
When Should You Choose A Savings Account?
Choose a savings account if you need flexible access to your money and plan to make frequent deposits or withdrawals. They’re great for short-term savings goals, such as:
When Should You Choose A CD?
Choose a CD if you want a guaranteed return and can leave your money untouched for a specific period to earn higher interest. They’re great for long-term savings goals, such as:
At BCU, we understand how essential saving money is on the path to financial freedom. That’s why we offer a variety of accounts designed to help you maximize your money potential, without hidden costs or unnecessary fees.
When you become a member of the Credit Union, we make the $1 deposit in the regular savings account required to open a membership for you. We also offer a higher-yield Rainy Day Savings™ account to jumpstart your short-term savings.
Looking for a CD? It only takes $500 to open, no matter the term length or interest rate. Our diverse CD terms allow you to align your investment with your timeline, whether it's a short-term boost or long-term growth.
Learn more about the savings and CD accounts we offer and start your financial freedom journey today.
Ready to experience the credit union difference? Become a member of BCU!
About BCU: BCU is a not-for-profit, member-owned credit union that is fiercely dedicated to Empowering People To Discover Financial Freedom. With over $6B in assets, BCU is committed to providing a fast, easy, and secure banking experience along with extraordinary service to more than 360,000 members. The BCU field of membership includes employees and their families from Fortune 100 companies across the US and Puerto Rico. Membership is also open to individuals who live or work in Northern Illinois, Southern Wisconsin, and Puerto Rico, as well as subscribers of BCU’s wholly owned Credit Union Service Organization (CUSO), Life. Money. You.®. All BCU members enjoy lifetime access to financial services and well-being programs that inspire confidence through the brand promise “Here Today For Your Tomorrow.”
To learn more about how we can help you realize your financial dreams, visit BCU.org. For media inquiries, visit BCU.org/About-Us/Media-Relations.
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