Is that CD safe?

November 28, 2006

I frequently see ads for CDs in the local newspaper with higher than normal interest rates.  Many of my clients ask me if these CDs are safe.

You only want to invest in CDs, savings, or money market deposit accounts if they are insured by the FDIC.

The FDIC – short for the Federal Deposit Insurance Corporation – is a goverment agency that protects depositors against loss of deposits in the event the bank or savings institution fails. 

Your accounts are insured up to $100,000, per person and per bank.  Accounts covered by FDIC include checking, NOW, and savings accounts, money market deposit accounts, and time deposits such as certificates of deposit (CDs).

Investments such as stocks, bonds and mutual funds are not covered by FDIC, even if purchased through an FDIC insured bank.

To check whether a bank or savings association is insured by the FDIC, call 1-877-275-3342, or visit

Tips to protect yourself:

  1. Never buy an investment you don’t understand
  2. Understand the risks involved – non FDIC insured investments may earn a higher rate, but they are riskier as well
  3. Know who you’re investing with – is it a bank, credit union, brokerage company?  What do you know about this company?
  4. Make sure the investment is appropriate for you – a 20-year CD is not appropriate if you need income now.
  5. Ask questions, ask questions, ask questions.  If you’re not getting satisfactory answers, don’t invest.


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Kristine McKinley, CFP®, CPA, is the founding principal of Beacon Financial Advisors, LLC, an independent, fee-only financial planning firm located in Lee’s Summit, Missouri and serving the greater Kansas City area.

Kristine focuses on providing fee-only financial planning, investment advice, and tax preparation to individuals and families from all income levels.  About Us

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Kiplinger Magazine/NAPFA – Kristine McKinley answered reader’s tax questions during the 2013 Jump Start Your Retirement Plan Days sponsored by Kiplinger magazine and the NAPFA Consumer Education Foundation.