Certificate of Deposit: The Gift That Gives Back

There are many benefits to getting a Certificate of Deposit for your child. Christmas is coming. And while there will probably be other gifts under the tree, the gifts of a CD keep on giving.

Why start a CD now, and why at Christmas?

There are a number of current great CD specials available now. Current rates are generally favorable. Buying a CD now helps lock you in at a good rate and avoid market swings. Stock market swings eventually happen and a CD is a safe way to be unfazed by them. Christmas is also a great time to purchase a CD. Think of it as a milestone you celebrate every year. The milestone is a reminder to invest. Every year, you can buy a new CD in your child’s name. Before you know it, you will have compounding interest on a number of CD’s. Check out our financial calculators to see how the interest really adds up!

Common questions about CDs for your child

A lot of parents simply don’t know what options are available for their children. That’s where an American Bank & Trust banker can help out. They will walk you through the options, minimum deposits, rules and anticipated returns. Here are some questions to ask: • What is the current rate? • What is the minimum deposit? • What are the rules? For example, many don’t know you can put a CD in a child’s name. However, you as the parent are still listed as custodian and still control the CD. Both names and social security numbers are listed on the CD. The child can then take full possession at age 18.

Other CD benefits

While there are many ways you can invest for your child, a CD is a safe way to invest and lock in rates. Another fun benefit of buying a CD for your children is tracking it. We have all learned basic math and interest in school. And using a calculator or figuring out math by hand is a good way for children to practice math. What’s more, it teaches financial responsibility and the value of money. When a child sees a parent put an emphasis on saving, they learn the value of saving too. For more on how you can save this Christmas, contact your local American Bank & Trust location today.