5-month Certificate of Deposit: 4.50 APY²
Lock in 4.50% APY for 5 months—just in time for Member Appreciation Week. From October 13–18, open our limited-time 5-Month CD Special and give your savings a guaranteed boost without the market drama. Minimum opening deposit required; early-withdrawal penalties apply.
Benefits of a PDCU High-Yield Certificate of Deposit
- Open a CD with as little as $500
- No monthly or maintenance fees
- Funds NCUA insured up to $250,000
Open a 5-month CD Special:
How It Works
- Opening the CD: You deposit a lump sum of $500 into the 5-month CD Special account.
- Fixed Term: The money is committed to the CD for a fixed term of nine months. You cannot add to or withdraw from the principal amount during this period without incurring penalties.
- Interest Rate: PDCU pays you a fixed interest rate on the deposited amount for the entire term.
- Maturity: The CD matures at the end of the 5-month term. You can then withdraw the funds, renew the CD, or transfer the funds.
- Early Withdrawal Penalty: If you need to access the money before the 5-month term ends, you will lose 90 days of interest.
Frequently Asked Questions
APY stands for Annual Percentage Yield. It is a measure of the total amount of interest earned on an account based on the interest rate and the frequency of compounding over a year. APY is a useful metric for comparing the annual earnings on different savings products, such as savings accounts, CDs, and money market accounts, because it standardizes the effect of compounding.
Key Points About APY
- Includes Compounding: APY accounts for how often interest is compounded (e.g., daily, monthly, quarterly), which can significantly affect the total interest earned over time.
- Comparison Tool: APY provides a standard way to compare the annual interest earnings of different savings products, regardless of how frequently interest is compounded.
- Formula: The formula for calculating APY is:
APY = (1 + r/n)^n - 1
where r is the nominal interest rate (expressed as a decimal), and n is the number of compounding periods per year. - Higher APY: A higher APY indicates that you will earn more interest on your money over a year, assuming the same principal amount.
Example
For example, if a savings account offers an interest rate of 5% compounded monthly, the APY would be higher than 5% due to the effect of monthly compounding. This makes APY a useful metric for comparing the real return on different financial products.
Withdrawing money from a 9-month CD before the term ends typically incurs an early withdrawal penalty. At People Driven Credit Union, the Early Withdrawl Penalty is a Loss of 90 days of interest for withdrawing funds early.
Yes, your money is safe in a 9-month CD. At People Driven Credit Union, our CDs are insured by the NCUA (National Credit Union Administration) up to $250,000 per depositor.
When you’re comparing savings accounts, CDs, or other financial products, you’ll often see two numbers: an interest rate (or dividend rate, if it’s a credit union account) and an Annual Percentage Yield (APY). At first glance, they might seem like the same thing—but they’re not. Knowing the difference helps you make smarter financial choices, whether you’re opening a savings account or making a long-term investment. Let’s break it down.
Both accounts have the same base rate, but because Account B compounds monthly, the APY is slightly higher. That’s the effect of compounding.
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Interest Rate or Dividend Rate: the Base Number
Interest Rate
The interest rate is the basic percentage a bank or credit union uses to calculate how much you’ll pay on a loan or earn on a deposit, before considering how often interest is added (compounded). Let’s say you open a credit union savings account with an interest rate of 3.00%. That’s the base rate your money earns before compounding is applied.Dividend Rate
At a credit union, the term "dividend rate" is often used instead of "interest rate" for deposit accounts. As a member-owner, you’re technically receiving a share of the credit union’s earnings—similar to a dividend from a company. Functionally, though, the dividend rate works the same way as an interest rate on a bank account. [midtextcta headline="Your Loan Starts Here" text="Begin your path to financing your dream. We'll help you turn your financial goals into reality." button="Apply Now" button_link="" background="https://www.peopledrivencu.org/wp-content/uploads/2025/05/bg-ctablock-2-graphic.jpg"]Annual Percentage: the Full Picture of Earnings or Costs
Annual Percentage Yield (APY)
APY shows how much you earn in a year on deposits, including the effects of compounding. Compounding is the process of earning interest on your interest (for deposits) or being charged interest on interest (for loans). If your account compounds interest daily or monthly, you’ll earn a bit more than the base rate, because you start earning interest on the interest that’s already been added. That extra boost from compounding is why the APY is slightly higher than the interest/dividend rate.Compounding Interest: Dividend Rate vs APY
APY provides a clearer picture of the actual annual earnings from savings accounts, money markets, and certificates because it includes compounding. For loans, APR is the more accurate number for comparing costs between offers, because it reflects compounding as well as fees.- Interest Rate/Dividend Rate: If a savings account offers a 5% interest rate compounded monthly, the nominal rate is 5%. This is the base number for how much your balance will grow before compounding.
- APY: When considering the monthly compounding, the same account will have an APY slightly higher than 5% because the interest earned each month also earns interest in subsequent months.
Comparing Financial Offers Using APY
If you only look at the interest or dividend rate, you might think two products are equal—but differences in compounding or fees can make one clearly better for your wallet. A savings account with a slightly lower rate but daily compounding could earn you more than one with a higher rate but annual compounding.Interest Rate vs APY Example
Always use APY when comparing savings products from different institutions. Knowing the difference between the base rate and APY helps you see the full picture, allowing you to make confident choices—whether you’re saving for a big purchase or making long-term investments. Let’s compare two savings accounts:| Account | Dividend/ Interest Rate | Compounding |
APY |
|
A |
3.00% | Annual | 3.00% |
| B | 3.00% | Monthly |
3.04% |
Let Us Help You With the Next Big Stage of Your Life
At People Driven Credit Union, we’re dedicated to helping you achieve your financial goals. As a member-owned financial institution, we’re literally invested in your future—and stand behind our commitment to transparency, security, and service excellence. Become a member and open an account today!A 9-month CD works as follows:
- Opening the CD: You deposit a lump sum of money into the CD account. The amount often needs to meet the bank or credit union's minimum deposit requirement.
- Fixed Term: The money is committed to the CD for a fixed term of nine months. During this period, you cannot add to or withdraw from the principal amount without incurring penalties.
- Interest Rate: The bank or credit union pays you a fixed interest rate on the deposited amount for the entire term. This rate is usually higher than that of a regular savings account because the bank can use your money for a predictable period.
- Interest Accumulation: Interest is typically compounded and credited to your account at regular intervals, such as monthly or quarterly.
- Maturity: At the end of the 9-month term, the CD matures. You then have a few options:
- Withdraw the funds: You can take out your initial deposit plus the interest earned.
- Renew the CD: You can roll over the funds into a new CD, either for the same term or a different one, possibly at a new interest rate.
- Transfer the funds: You can transfer the money to another account.
- Early Withdrawal Penalty: If you need to access the money before the 9-month term ends, you will likely face an early withdrawal penalty. This penalty varies by institution but generally involves forfeiting a portion of the interest earned.
- FDIC/NCUA Insurance: If the CD is held at a bank, it is insured by the FDIC (Federal Deposit Insurance Corporation) up to $250,000 per depositor per bank. If held at a credit union, it is insured by the NCUA (National Credit Union Administration) with the same coverage limits.
A 9-month CD can be a suitable option for short-term savings goals, offering a balance between earning a higher interest rate and having your money tied up for a relatively short period.
A 9-month CD (Certificate of Deposit) is a type of savings account offered by banks and credit unions. Here are the key characteristics:
- Fixed Term: It has a maturity period of nine months, during which the deposited money is locked in.
- Interest Rate: Typically offers a fixed interest rate generally higher than regular savings accounts.
- Minimum Deposit: Often requires a minimum deposit amount to open the account.
- Early Withdrawal Penalty: If you withdraw the funds before the 9-month term ends, you usually incur a penalty, a portion of the interest earned, or a specified fee.
- FDIC Insured: In the United States, CDs from credit unions are usually insured by the National Credit Union Administration (NCUA) up to $250,000 per depositor per credit union.
A 9-month CD can be a good option if you have a specific short-term savings goal and want to earn a higher interest rate without taking on much risk.
Disclosures
