A 100-year CD puts a new spin on long-term investing. Is it a good idea?

Savers may want to lock in high interest rates for the long haul before they likely head lower later this year.

But is 100 years too long?

Concord, New Hampshire-based Walden Mutual Bank is finding out. The financial institution is offering a100-year Local Impact Certificate of Deposit (CD) paying a fixed 4.75% annual interest rate.

The CD is open to anyone with $1,000 and up to $150,000 to invest and is Federal Deposit Insurance Corp (FDIC) insured up to $250,000. The CD allows people to invest alongside Walden to support local agriculture, specifically lending to food and agriculture businesses in New England and New York, the bank said.

“A five-year CD is common, a ten-year CD is a rarity, and a 100-year CD is one-of-a-kind,” said Mary Grace Roske, spokeswoman at CD rates comparison site CDValet.com. “Walden Mutual has created a unique opportunity for people who want to align their values --- environmental responsibility, in this case - and their savings, and it’s a creative spin on socially responsible investing.”

Learn more: Best current CD rates

What is the 100-year CD?

Here are the details:

• Minimum investment of $1,000 up to $150,000 per individual or organization:
• Fixed 4.75% APY for the 100-year life of the CD
• FDIC insurance up to $250,000
• A completed beneficiary form is mandatory at account opening
• You may withdraw your entire deposit at any time by request, subject to a penalty of 10 years' interest. If you withdraw the CD before 10 years, the penalty will reduce the principal value of the CD.
• Interest paid can be withdrawn penalty-free at any time, automatically or by request. In approximately 15 years, more than half of your deposit will be interest, which is withdrawable on demand, penalty free. For example, if you purchased a CD for $1,000 and withdrew it after 20 years, you would receive $1,942, or an effective interest rate of 3.32%. 
• Partial withdrawal of principal is not permitted.
• It isn’t callable by the bank, meaning only the holder can redeem the bond early.

What is Walden Mutual Bank?

Walden is a mutual savings bank and a certified B-corporation, or a for-profit corporation certified with a social impact. Walden’s focused on serving farms, food businesses, sustainability-related business and nonprofit organizations, according to CDValet.com.

It’s a mutual bank, meaning it has no shareholders and it’s owned by its depositors, Walden said.

Walden was founded in 2022 as “an online bank for everyone who eats/makes/grows/cooks/loves local food,” its 2022 annual report said.

Chief executive Charley Cummings combines a business degree with an agricultural background, having started a meat Community Supported Agriculture (CSA) that allows consumers to buy shares of a farm's harvest in advance.

Why a 100-year CD?

Walden said a 100-year CD allows it to offer local agricultural businesses longer-term loans.

For example, “a low margin farm may not be able to support the payments on a 10-year mortgage for farmland, but if those terms are extended to 30 years, the payment is manageable,” Walden said. “In order to support those longer-term loans, we need longer-term deposits to ensure we can properly manage our balance sheet.”

Is the 100-year CD a good investment?

Walden said, “the CD makes for a good addition to a Donor Advised Fund, part of a charitable giving strategy, or a trust intended to benefit a future generation, but it is also an attractive fixed income alternative for an individual or organization, even if not held to maturity.”

But if you’re looking solely to maximize returns, some advisers say look elsewhere. Here’s why:

• Interest rates may rise above the 100-year CD’s fixed 4.75% rate and you’ll lose out, Roske said.
• The broad S&P 500 stock index has returned 8-10% annually, on average, for the last century.
• Significant early withdrawal penalty of 10 years of interest, which could include loss of principal if less than 10 years. “Other CDs lose interest only,” said Steve Azoury, founder of Azoury Financial.
• Walden Mutual has a short operating history, Azoury said. “The CD’s covered by the FDIC, but you could get a big hassle if (Walden) closed up.”
• Potential tax headaches of reporting CD interest for a century, Azoury said. Beneficiaries must pay tax yearly on their portion of the interest after the original owner passes, “and if you have multiple beneficiaries, what if one wants to cash it out and another doesn’t?” A charity wouldn’t have to worry about that, though.

Saver's delight:Time to give CDs a spin? Certificate of deposit interest rates are highest in years

Who’s the right investor for a century CD?

“It is a conservative strategy to incorporate into a charitable giving plan, or a trust intended to benefit a future generation,” Roske said. “Of course, there are more profitable ways to invest, but the 100-year CD captures the ‘think globally, act locally’ mindset of a growing number of people.”

Medora Lee is a money, markets, and personal finance reporter at USA TODAY. You can reach her at [email protected] and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday morning.