What Are the Drawbacks of Traditional CDs for Businesses?
Lack of Liquidity: Funds in a traditional CD are not easily accessible before the maturity date, which could be a drawback if the business needs quick access to cash. Penalties for Early Withdrawal: Withdrawing funds before the term ends usually incurs penalties, reducing the overall return on investment. Inflation Risk: If the interest rate on the CD is lower than the rate of inflation, the real value of the investment may decrease over time.