If you’re a saver in Vermont or New Hampshire looking for a guaranteed return on investment, Passumpsic Bank has a perfect solution: a Certificate of Deposit. So, what is a Certificate of Deposit? It’s a savings account, commonly known as a “CD,” with a fixed interest rate for a set duration of time. Deposit money in your new account, leave it there for the agreed-upon term, and at the end you’ll earn a guaranteed return on your investment. That’s predictable growth from a trusted institution that has been serving its customers since 1853, making Passumpsic Bank one of the longest-operating mutual savings banks in the United States.

How Does a Certificate of Deposit Work?

Here’s how a CD works: First, you decide what amount you want to invest and deposit it in your account. Most CDs require a minimum amount so you can use that as a guide. CDs have a fixed term, and typically range from 3 months to 5 years. A general rule of thumb is that a shorter term offers more flexibility, while a longer term offers higher interest rates. A CD earns a fixed Annual Percentage Yield (APY), so the interest rate stays the same for the whole term. The CD term ends on its maturity date, at which point you can access your money without penalty. You can withdraw your money, renew it in another CD, or move your funds into another account. It’s worth noting, if you withdraw your money before its maturity date, typically you will be charged a penalty. 

So taking all this information into account, here is an example: If you open a CD account with $10,000 at a fixed APY of 4.00% for 2 years, on the maturity date you would have about $10,833, meaning $833 in earnings.  

CD vs. Savings Account: Which Is Right for You?

Feature	Certificate of Deposit (CD)	Savings Account
Access to Funds	Intention is for money to stay in the account until the maturity date. Early withdrawals may be penalized.	Funds can typically be accessed anytime without penalties (subject to bank withdrawal rules).
Interest Rate	Usually offers a fixed APY that stays the same for the full term. Often higher than standard savings accounts.	Interest rates are variable and may change over time based on market conditions.
Flexibility	Less flexible because funds are locked in for a set term (such as 6 months, 1 year, or 5 years).	More flexible for everyday saving and unexpected expenses.
Best used for	Saving money you know you will not need right away and wanting a predictable return.	Building emergency savings, short-term goals, or keeping cash easily available.

At the end of the day, the best use-case for a CD is when you have money you won’t need for a set period of time and want a guaranteed rate. A savings account, on the other hand, probably makes the most sense when you want to have easy access to your money while still earning interest, albeit less. It all comes down to what works best for you and your savings goals.

CD Terms: Short, Standard, and Specialty Options

Passumpsic Bank offers short-term CDs for 3-6 months, more standard terms of 12-24 months, and some specialty option CDs. They include a Youth 6-month CD, a Health Savings Account CD and an IRA/SEP Savings Variable Rate. Passumpsic even offers CDs with 2 to 5-year terms. Longer CD terms mean higher rates so you’ll earn more if you let your CD fully mature, but less flexibility as far as accessing your money goes. 

What Happens When Your CD Matures?

When a CD matures at the end of its term, you gain full access to your original deposit plus the earned interest. Most banks provide a grace period, usually 7-10 days, during which time you can decide on renewing the CD for the same term, withdrawing your funds, or rolling your money into a CD with a new rate or terms. 

If you take no action during the grace period, many institutions automatically renew the CD into a new one. This seems convenient, but it also creates the risk of locking into a lower rate or an unwanted term length. Once renewed, early withdrawal penalties may apply again if you decide to access the funds before the new maturity date. So best to stay on top of it once your CD reaches its maturity date!

Are CDs Safe? What FDIC Insurance Means for You

CDs are widely considered to be a low-risk savings option because they offer a fixed rate and predictable return. CDs issued by FDIC-insured banks are protected up to $250,000 per depositor by the Federal Deposit Insurance Corporation (FDIC). That means your money is protected even if your bank fails, as long as your total deposits stay within FDIC coverage limits.

If you’re ready to open a CD account, or if you’re just looking for additional information, Passumpsic Bank offers a range of CD terms for savers in Vermont and New Hampshire. Check out our current CD rates. If you like what you see, or even if you’re unsure of which option best aligns with your savings goals, we’re excited to help you to start earning!

Frequently Asked Questions

What is a CD account and how does it work?

A CD, or Certificate of Deposit, is a savings account with a fixed interest rate and a set term, typically ranging from 3 months to 5 years. You deposit money, leave it for the agreed term, and earn a guaranteed return. Passumpsic Bank offers a range of CD terms for savers in Vermont and New Hampshire.

Are CDs a safe way to save money?

Yes. CDs issued by FDIC-insured banks like Passumpsic Bank are protected up to $250,000 per depositor, even if the bank were to fail. Combined with a fixed rate, they’re one of the lower-risk savings options available.

What’s the difference between a CD and a savings account?

The main difference is flexibility versus rate. A savings account lets you access your money anytime, while a CD locks your funds for a set term in exchange for a higher, fixed interest rate. A CD is best when you have money you won’t need for a while and want a predictable return.

Can I open a CD account at Passumpsic Bank if I live in New Hampshire?

Yes, Passumpsic Bank serves customers across Vermont and New Hampshire, with branch locations in both states. You can open a CD in person at any branch or get started by contacting your local team.

What happens when my Passumpsic Bank CD matures?

When your CD reaches its maturity date, you’ll have a grace period, typically 7 to 10 days, to withdraw your funds, renew for another term, or move your money into a different account. If you take no action, most CDs automatically renew. We recommend keeping an eye on your maturity date so you stay in control of your rate and term.