You can secure a loan with your invested CD as collateral. But this must be in the banking institution where you have already invested a CD in. This is what is called a CD secured loan. Since you cannot cash in the CD without the bank knowing about it, it is therefore perfect collateral for a loan. So if you are in need of a loan, you should consider talking to your bank where you have a CD account about CD secured loans. The lending institution will typically make a loan for up to 90 percent to 100 percent of the value of the  deposit and the loan term will be for no longer than the duration of the CD, although both may be renewed or rolled over.

Banks and credit unions that issue this type of loan always use it to build a credit history. Like a secured credit card, you are borrowing against money on deposit. For the payment history to help your credit score, however, the bank has to report it to the credit bureaus.

Furthermore, the lending institution may not require any payments on the loan until maturity; giving you maximum flexibility. Some may bill it as an interest only loan until its maturity date. In general, these loans are priced 2 percent to 3 percent over the rate that you are earning on your CD.

CD secured loans can be a good source of funds if you have a poor credit history because you will get a better rate from the bank than you could ever hope to get an unsecured loan with a poor credit history. But you will still have to look at the cost of paying 2 percent to 3 percent more on the loan than you are earning on your deposit.

Before you decide to take a CD secured loan, you have to ask yourself what the goal is in getting a CD secured loan. This is because you could incur the early withdrawal sanctions, cash in the CDs and avoid the interest expense on the loan if you need the money but that will not do anything toward building a credit history.

You must realize that the main goal and objective in CD secured loan is getting the payments to the bank on time, that way they can report to the credit bureaus that you are on time and current with your payments. The bank reports to the credit bureaus monthly and the credit bureaus update credit scores every three months. So after the first three to six months you should notice an increase in your credit score. You must therefore endeavor to make your payments on time.

It is good to use this as means of building your credit history. On the contrary, if do not have any cogent reason for going for a CD secured loan like the one stated above, you must keep away from taking one since it will not augur well with your already invested CD account.