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A certificate of deposit, commonly referred to as a CD, is a type of savings account that banks and other financial institutions offer. In exchange for depositing funds for a period of time (usually 3 months or longer), you’ll get rates for certificates of deposit that are higher than savings account rates. Bank CDs are protected by the FDIC up to $250,000, and the longer you leave your deposit with the bank, the more your money will grow.
Typically, the interest rates for certificates of deposit are compounded, so your money grows quickly. However, a tradeoff is that you cannot have access to that money whenever you’d like, but rather must adhere to the deposit term specified (or face deep penalties).
There are many kinds of CDs available, with each offering different rates, requiring various deposit lengths, etc. It’s important to evaluate your choices based on how much money you want to deposit, and the length of time you’ll invest, in order to get the certificate of deposit that best suits your individual needs.
Certificates of deposit allow investors to deposit their funds in an account that is insured by the Federal Deposit Trade Commission, or FDIC, which means that your investment is secure and does not have at a high risk of loss. For this reason, certificate of deposits are popular investments widely available from a variety of banks and credit unions. Rates for certificates of deposit can vary, as can length of time commitments and other factors. Compare rates for certificates of deposit here to discover the best rate of return, or largest amount of interest that can be earned, on your funds.
