Why a 12-Month CD at a Credit Union or a Bank Might Be a Smart Money Move This Year

By Dr. Mary Kelly, Leadership Economist and Keynote Speaker

For years, Certificates of Deposit (CDs) had a reputation for being boring, outdated, and about as exciting as watching paint dry. They were the investments our grandparents loved—safe, predictable, and admittedly, a little dull.

But the financial world has changed. Today, a 12-month CD at your local credit union or local bank might be one of the smartest, safest, and most profitable moves you can make.

I recently revised some of my investments and moved things into some CDs with my credit union.

Yes, the US stock market is hitting record highs, but these price-to-earnings ratios are making some investors worried. Here’s why CDs are making a comeback and why you might take a second look.

1. Higher Rates and Better Returns

For much of the last decade, CD rates barely outpaced a savings account. Today, thanks to changes in interest rates and competition among financial institutions, 12-month CDs at credit unions and local banks are offering some of the best returns we’ve seen in years.

Credit unions, which are not-for-profit organizations, typically return their profits to members in the form of better rates and lower fees. This often means a higher annual percentage yield (APY) than traditional banks. For savers looking for guaranteed growth without market risk, this is a huge advantage.

2. Safety and Security You Can Count On

A CD isn’t just a way to raise your money—it’s also one of the safest investments available.

Credit union CDs are federally insured by the National Credit Union Administration (NCUA) up to $250,000 per member, per account type. That means your money has the same level of protection as a bank account insured by the FDIC.

There’s a lot of peace of mind in knowing your money is safe, secure, and guaranteed.

3. CDs Are Now More Flexible Than Ever

One of the biggest problems of the old CD model used to be their lack of flexibility.

Traditionally, you had to lock your money up for the full term or face a hefty early withdrawal penalty. But many financial institutions today are offering more innovative CD options, including:

• Low or no penalty early withdrawals
• Add-on CDs, where you can add more money after opening.
• Step-up CDs, which increase your rate if interest rates rise.

These features make CDs more accessible and convenient for people who might need a little wiggle room.

4. A Perfect Fit for Short-Term Savings Goals

If you have money set aside for a goal within the next year, like buying a car, taking a dream vacation, or making a down payment on a house, a 12-month CD is ideal.

Why?

• It keeps your money safe and separate from daily spending.
• You’ll earn much more interest than a regular savings account.
• You have a clear timeline for when you’ll access those funds.

This kind of disciplined savings tool helps you resist the temptation to dip into your goal money early.

5. Outperforming Traditional Savings Accounts

Regular savings accounts are convenient, but many of them pay shockingly low interest rates—sometimes as little as 0.01% APY.

Even with a modest amount to invest, a CD with a competitive rate can generate hundreds of dollars more in interest over a year compared to leaving your money in a standard savings account.

That’s money you can earn just by being strategic about where you park your funds.

CDs have come a long way since the days when they were a set-it-and-forget-it tool for retirees.

Today, a 12-month CD at a credit union combines the best of both worlds: the security of a traditional savings vehicle with competitive rates and modern flexibility.

Whether you’re planning for a short-term goal or simply want a safe place to grow your savings, it might be time to follow your grandparents’ lead – with a modern twist.