Graduation season is a time to celebrate achievement, independence, and the exciting road ahead. While cash and gift cards are common go-tos, there’s a smarter way to give a gift that stands the test of time—literally. A certificate of deposit (CD) offers a meaningful, practical, and potentially more rewarding option for graduates as they enter a new chapter of life.
Why Gift a CD?
A CD is a low-risk savings tool offered by banks and credit unions that holds a fixed amount of money for a set term—often six months to five years—in exchange for a guaranteed interest rate. Here’s why that matters for grads:
1. It Encourages Saving, Not Spending
Let’s be honest— most graduates may spend a cash gift within days. Gifting a CD helps encourage better money habits by setting funds aside where they can grow. It introduces the idea of delayed gratification and disciplined saving—important values for young adults managing their own finances for the first time.
2. It Earns Interest While They Focus on Their Future
Unlike a gift card or cash that sits idle, a CD earns interest over time. It’s an easy way to help graduates build a financial nest egg while they focus on college, a new job, or planning their next move. Depending on the term and rate, that gift could grow substantially by the time it matures. The fixed interest rate means that you know exactly what your gift will be worth when the CD matures—no guessing, no market swings, no stress.
3. It’s Protected and Predictable
Most CDs are insured by the Federal Deposit Insurance Corporation (FDIC) or National Credit Union Administration (NCUA) up to $250,000 per institution, based on account ownership and account type. This makes CDs a safe option where the principal will be secure.
4. Flexible Gifting Options
You can choose a term that matches the graduate’s plans—say, a one-year CD he or she can use after freshman year, or a longer-term CD to fund a post-college move or big purchase. Some financial institutions even offer CDs for minors or joint CDs if the recipient is under 18.
5. It Starts a Conversation About Financial Goals
Giving a CD is a great way to spark a conversation about saving, budgeting, and goal setting. It shows that you’re thinking long-term about your graduate’s success, and it may inspire them to continue building their savings in other ways.
