Confession: I've Never Put Money in a CD and I Never Will
KEY POINTS
- I am far more of an aspirational saver than I'd like to be.
- I am also still paying down considerable debt I amassed in 2020, which means that I have very little extra money for permanent savings.
- I still recommend CDs for people who are in the right phase of their lives, and who can afford to lock up large blocks of money.
I spent some time debating if I should even write this, since, you know, it's kind of a big confession after months and months of writing about the many reasons you should be investing in certificates of deposit.
But here's the thing -- I'm never going to invest in a CD, even though I know it's a reasonably good idea in some cases.
It's not really about CDs, so much as it is about me. CDs aren't for everyone, and I'm definitely not the right person to be a CD investor. Let's talk about why.
1. I am an aspirational saver
The biggest problem I have with CDs is that I'm an aspirational saver. That is to say, I want to save money, and I get really excited about saving, and I even throw a bunch of money into my savings account, and then something happens that I had forgotten to account for.
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That might be something obvious, like paying my property taxes, or it might be something less obvious, like forgetting that it's time to get new tires for my car. Whatever it is, I am simply not good enough at planning over the very long term to lock money away into a CD for some set amount of time. Although I'm getting better at this, I can't trust myself to have money I can't access as needed.
But if you're a careful planner and have a block of money you don't intend to touch for the long term, check out the best CD rates we've found on this page.
2. I am still paying off a lot of debt
The cause of issue No. 1 is largely issue No. 2. A lot went wrong in my life around the beginning of the COVID-19 pandemic, and because of that, I have a lot of debt I'm still paying back. I also picked up additional debt when my dogs got sick and I had two years of cancer care to pay for. Even though we ultimately chose palliative care, it was still expensive and exhausting and lasted far longer than I had budgeted for.
So I have a lot of debt, which makes it very hard in a job like this to set aside a big block of money and just not touch it indefinitely. Journalists often have irregular income streams, and because my debts are unusually high right now, it puts me at even more risk of default, so I have to keep as liquid as I can.
I can and have stuck money in a high-yield savings, but I can withdraw those funds at any time if I have a financial shortage, unlike with a CD. Check out our list of the best high-yield savings accounts with APYs over 4.00%.
3. I am the only earner in the household
I'm divorced and have been a sole earner for years, which means that I have no safety net should something go terribly wrong. This is a good argument for saving in general, but it's also a terrible situation in which to use CDs, because you need money when you need it, and if I suffered a serious injury or had a big expense, there's nowhere else to get money from but myself.
It's all on me and my savings account.
If you're part of a multi-earner household, or have some other kind of backup plan, then a CD is less of a risk to you than it is to me. Definitely put some money in one, you'll really be glad you did, provided you have other places to grab money from in the event of a big emergency.
Do I still recommend CDs? Absolutely
Just because I have never bought a CD and never will, because I know how I am and the life that I lead, it doesn't mean I don't recommend them wholeheartedly to other people.
My friend Anna has a CD for her kid's college tuition, which is great because she can take out what she needs to pay for the next year, put the rest back into a new CD, and draw a significant amount of interest from it while it does nothing. It's perfect for her, and when she asked me about it, I emphatically endorsed the idea.
But for me? No.
I'm not in a place where that will probably ever make sense for me. I've been a career journalist for almost 30 years and I've seen the ups and downs of the industry. I'm not about to take a hit equivalent to months or years' worth of interest if there happens to be a significant downturn and I have to pull money out to live on until I land that next big career break.
Our Research Expert
Kristi Waterworth is a financial journalist located in the Missouri Ozarks. When she’s not writing about real estate or personal finance, she’s committing shenanigans with her four dogs.
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