CD laddering is the process of spreading cash across various CD maturity terms and rates. Learn more about CDs and laddering to elevate your savings strategy.
You might have heard of the term compound interest before and the benefits it can have on your finances. A compound interest account is any account that pays you interest on your principal and interest, not just your original deposit. The interest you earn on your balance is rolled into the existing amount, increasing your new current balance and making your money grow faster. In addition, if interest is compounded more frequently, the more your money will grow.
In particular, a higher-than-average interest rate on a Certificate of Deposit (CD)1 or savings account1 is a great way to help you maximize your earning potential and expedite your savings.
Examples of Compound Interest
1. Savings Accounts1, Checking Accounts1, and Certificates of Deposit (CD)1
When deposits are made into an account that earns interest, and the interest you earn is added to your principal balance, your principal balance grows, allowing you to grow the amount of interest you earn on the balance because you earn interest on your interest. To help maximize what you earn, consider opening a First Bank consumer high-yield savings account (HYSA)1 or high-interest CD1. Our higher rates will help you grow your savings faster than other traditional savings products.
2. 401(k)2 and Investment Accounts2
If you have a 401(k)2 or an investment account2, you might notice that you’ve been earning interest on your balances. Consider having a portion of your paychecks allocated toward your 401(k)2 or have dividends from stock2 reinvested. This will help grow your balances quicker and, in turn, earn you more from your interest compounding.
3. Credit Cards
Unlike an interest-earning account that has the interest compounded, compound interest can also negatively affect you, like when you carry a balance on your credit card each month. Generally, each month when you carry a balance, your credit card charges you interest, and generally that interest is compounded (or added) to the credit card balance. If you continue making purchases on your card, not only will you owe more money on your credit card, but generally, the amount of interest you need to pay each month will grow.
Compound interest is a great way to give your savings a boost and can be a powerful motivator to help you start paying off debt faster. If you have questions about opening a First Bank CD1 or HYSA1, contact us. We’d be happy to help.
1This First Bank product is insured by the FDIC. FDIC deposit insurance protects money you hold at an FDIC-insured bank in deposit accounts, such as a high-yield savings account or a CD. The standard FDIC deposit insurance amount is $250,000 per depositor, for each account ownership category per insured institution. For more information, visit www.fdic.gov.
2This product is not a deposit or other obligation of, or guaranteed, by First Bank. The return and principal value of an investment in bonds or stocks fluctuate with changes in market conditions and, when sold, these securities may be worth more or less than their original cost. Investments seeking to achieve higher yields
Investment and insurance products are offered through OSAIC INSTITUTIONS, INC., Member FINRA/SIPC. Osaic Institutions and First Bank are not affiliated. Osaic Institutions does insurance business in California as Osaic Institutions Insurance Agency, CA Agency License #OH30186. Products and investment advisory services made available through Osaic Institutions are not insured by the FDIC or any other agency of the United States and are not deposits or obligations of nor guaranteed or insured by any bank or bank affiliate. These products are subject to investment risk, including the possible loss of value. First Bank Wealth Management is a trade name of First Bank, and certain products and services are provided through First Bank, and its affiliates and subsidiaries. Neither Osaic Institutions or First Bank, nor any of their affiliates or financial advisors, provide legal, tax, or accounting advice. You should consult your legal and/or tax advisors before making any financial decisions. Use FINRA’s BrokerCheck to learn about the professional background, certifications, licenses, and any regulatory violations or complaints for any financial advisor.
2This product is not a deposit or other obligation of, or guaranteed, by First Bank. The return and principal value of an investment in bonds or stocks fluctuate with changes in market conditions and, when sold, these securities may be worth more or less than their original cost. Investments seeking to achieve higher yields
Investment and insurance products are offered through OSAIC INSTITUTIONS, INC., Member FINRA/SIPC. Osaic Institutions and First Bank are not affiliated. Osaic Institutions does insurance business in California as Osaic Institutions Insurance Agency, CA Agency License #OH30186. Products and investment advisory services made available through Osaic Institutions are not insured by the FDIC or any other agency of the United States and are not deposits or obligations of nor guaranteed or insured by any bank or bank affiliate. These products are subject to investment risk, including the possible loss of value. First Bank Wealth Management is a trade name of First Bank, and certain products and services are provided through First Bank, and its affiliates and subsidiaries. Neither Osaic Institutions or First Bank, nor any of their affiliates or financial advisors, provide legal, tax, or accounting advice. You should consult your legal and/or tax advisors before making any financial decisions. Use FINRA’s BrokerCheck to learn about the professional background, certifications, licenses, and any regulatory violations or complaints for any financial advisor.