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Advantages of certificates of deposit (CDs)
(Source: Merrill Lynch)


If you buy CDs and need to sell them prior to maturity, you may be able to do so in the secondary market. The price you receive in the secondary market may be higher or lower than the price you originally paid, depending on market conditions.

Because CDs are time deposits, early withdrawals are not generally allowed. However, early withdrawals with no interest penalty are permitted in limited instances, such as death, an adjudication of incompetence or, with retirement accounts, disability.

Low Minimum Investment

It usually takes just a low minimum investment of $1,000 to gain access to the national CD market.

Flexibility of Reinvestment

All interest payments and returns of principal on your CDs are usually automatically credited to your account. You can easily reinvest these funds by instructing your financial consultant to roll the money over into another CD or to place it in other investments.

If your CDs are held in your cash management account  or capital  account  for example, interest and principal payments will automatically be invested in your choice of the  savings account or a money market fund while you consider longer-term investments. In this way, all your money works for you all the time.