Whether you're saving up for an emergency fund, a vacation, a down payment on a house, or anything else, the right account can help you maximize your hard work. Both a CD and a savings account allow you to safely stash away your funds while earning interest. But there are some core differences that could impact which one is the better option for your savings goal.

What is a Savings Account?

A savings account is a flexible option held at a credit union or bank. You get easy access to your funds, typically with up to six withdrawals each month. Most savings accounts have either no or low minimum deposit requirements, making them a good choice no matter how much money you're able to start off with.

You'll receive annual interest that compounds throughout the year. Plus, savings accounts held at accredited credit unions like ACU of Texas are federally insured up to the allowable limits.

What is a Certificate of Deposit (CD)?

A certificate of deposit is a type of savings account, but it comes with more restrictions than a traditional account. With a CD, you commit to keeping your money in the account for a predetermined amount of time. A CD term can last anywhere from a few months to several years. If you make withdrawals before the CD reaches that maturity date, you must pay a penalty — usually in the form of forfeited interest.

What's the benefit of locking your money into a CD? You also get to lock in your interest rate. While standard savings accounts come with variable rates that can go up or down, your CD will earn the same rate for the entire term.

When to Choose a Savings Account

There are several scenarios in which a savings account may be a better option than a CD.

  • You want flexible access to your funds
  • You expect interest rates to rise in the near term
  • You don't have a lot of savings elsewhere

When to Choose a CD

Considering a CD instead? Here are some examples of when it could be a good choice.

  • You have savings beyond your emergency account
  • You want to lock in a high interest rate
  • You have a clear timeline for using the funds

How to Open a Savings Account or CD at ACU of Texas

Ready to open a savings account or a CD? ACU of Texas is here to help. Explore our three traditional savings accounts, each of which comes with monthly dividends and low opening deposit requirements. Alternatively, check out our CDs, which start as short as three months to as long as five years. 

Become a member today and start saving on your own timeline!