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Dad gives child a certificate of deposit gift from Amerant Bank
Personal Finances

Certificate of Deposit Gifts: Guaranteed Returns 

Regarding any special celebration, there is one question on everyone’s mind: What gifts should I give? 

Whether it’s your kid or a close family friend you value, certificate of deposit gifts are a great choice. What exactly is a certificate of deposit, and how do they work? 

What is a Certificate of Deposit? 

A certificate of deposit, also known as a CD, is a type of savings account that allows you to earn interest. You begin by depositing a specific amount of money for a fixed period; this is the term length of the CD. During this time, you cannot withdraw the money from the account without incurring a penalty fee.

Once the term is over, you can redeem the money in the CD account and the accrued interest. People consider CDs as a low-risk investment option.

What are the Benefits of a Certificate of Deposit? 

A CD account has a plethora of benefits. Some of the most significant benefits include the following: 

  • Low risk 
  • FDIC insured up to $250,000 
  • Higher interest rates than other accounts 
  • Guaranteed returns 

To Whom Can You Gift a Certificate of Deposit? 

To open a CD, the account owner must specify themselves because it is a savings account. As a result, an adult cannot gift a CD to another adult. However, two acts allow CDs minors to receive CDs. The Uniform Transfers to Minors Act (UTMA) and the Uniform Grants to Minors Act (UGMA). 

You’ll need to know some of the recipient’s sensitive information. This includes their Social Security number, so giving a CD to an immediate family member is easiest. However, you do not have to have a familiar relationship with the recipient. You must collaborate with the child’s parent or guardian to acquire the necessary information. 

What Should You Pay Attention to When Opening a Certificate of Deposit Account? 

CD accounts are a safe tool for saving money, but it’s essential to review the different features of the CD. This way, you are sure before you commit. We suggest considering the following questions as you review your options: 

  • What is the interest rate of the CD term you’re applying for? 
  • Is the rate fixed or variable? 
  • When is the CD account’s interest paid? 
  • Is the interest paid via electronic transfer or a mailed check? 
  • How long until there is access to the CD funds? 
  • Is the maturity date specifically identified? 
  • What happens if there is premature access to the funds? 
  • Does the entity providing the CD have a good reputation? 
  • Is the entity a federally insured financial institution? 
  • Is the entity a broker with professional connections? 
  • Does the entity have a problematic history (such as fraud)? 

Certificates of Deposit: An Interesting Gift 

You can keep a child’s future safe with a certificate of deposit gift. Different CD gift options are available from Amerant Bank at any time. 

To learn more about how to open a certificate of deposit, visit our website at amerantbank.com and stay updated on the latest products and services with Amerant Bank. Find us on Facebook, Twitter, Instagram, and LinkedIn. Stay connected for tips, financial trends, the latest news, and special promotions.

Editorial Team
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