Smart Places to “Park” Your Cash
Financial advisers talk about “parking” your cash -- keeping it in an account until you’re ready to invest or spend it on a long-term goal, such as a down payment on a house.
Parking is a great way to think about holding cash. When you park your vehicle, you look for a safe location, one that’s handy to your destination, where you won’t get a parking ticket. Same thing when you park your cash. You don’t “park” money in an investment like stocks, because they’re prone to fluctuations in value. You need a safe investment that’s not subject to fees and that allows you easy access on your timetable.
So, where’s the best place to park your cash? If you need liquidity, a savings, checking or money market account with low or no fees may be your best bet. But if you have cash savings, you won’t need to access in the next year or two, consider parking it in a Certificate of Deposit (CD).
With a CD, you agree to leave your money in the account for a set term length and earn steady interest at a higher rate than most regular savings accounts. CDs can be a great way to diversify beyond the savings account you may already have. Another advantage: CDs typically offer fixed rates for fixed terms. Knowing that, you can accurately estimate your earnings and plan accordingly.
A CD can also help you stick to your savings goals, because you “lock up” your cash for a set period of time. If you plan to buy a house in two years, for example, putting some of your savings for the down payment in a CD will help ensure you don’t use that money for something else in the meantime.
Most importantly, CDs offer safety and security; credit union CDs are insured for up to $250,000 through the National Credit Union Administration, while bank CDs are backed by the Federal Deposit Insurance Corporation for the same amount.
Generally, a CD term can run from 3 - 60 months but for a limited time, InTouch Credit Union is offering both a special 21-month CD and a 13-month CD with rates that are hard to beat!
If CDs sound like smart places to park your cash, call our Member Care team at (800) 337-3328, option 5, or visit your local branch for assistance.