Some banks and credit unions allow their customers to take a loan against their existing certificate of deposit, or CD. Here's how it works and what to watch out for.
While the stock market has taken a hit and selling now may lock in losses, CD owners may be able to access low-cost cash without actually tapping that money.
As cash-strapped households look for cheap ways to borrow money, one alternative from some banks and credit unions may hold appeal: a loan against your certificate of deposit. "If your CD has a severe early withdrawal penalty and other borrowing options have high interest rates, a CD loan might make sense when all things are considered," said Ken Tumin, founder of DepositAccounts.com. "But the best option is to use cash [instead of borrowing], if possible."As the coronavirus-induced economic crisis has led to business shutdowns and stay-at-home orders, roughly 26 million people have filed for unemployment over the five weeks ending April 17.
Generally, investing in CDs is a low-risk way to earn higher returns than you would in a regular savings account .
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