Earned Interest on My Savings Account Essay Example | Topics and Well Written Essays - 250 words

Earned Interest on My Savings Account - Essay Example Although the interest earned with certificate of deposit is higher than for a savings accounts, my decision for choosing the saving instrument would also be driven by some other factors. In a certificate of deposit, the money will remain locked for 5 years whereas in a savings account, I can withdraw and use the money whenever I need. Secondly, if at a certain time, the inflation starts increasing, the real value of the investment in the CD would become significantly lower than the money at hand in the savings account. For example, if after 2 years, the inflation reaches say more than 5% and remains there for the next 3 years, then the real value of the final amount I would receive from the CD would be much less than the actual balance at the end of 2 years in the savings account that I may have used already. On the other hand, if I expect the inflation to drop in the coming years, CD would be a more attractive option.