What is a certificate of deposit (CD)?

A certificate of deposit (CD) is a type of savings account that pays a fixed interest rate on money held for an agreed-upon period of time. CD rates are usually higher than savings accounts, but you lose withdrawal flexibility. If you withdraw your CD funds early, you'll be charged a penalty.

What is a certificate of deposit & how does it work?

When you open a certificate of deposit (CD), you agree to leave your money in the account for a set period of time. This can range from a few months to a number of years. In exchange, the bank or credit union will pay you a guaranteed return on the money, in some cases a higher interest rate than you'd get on a regular savings account.

What is a fixed rate Certificate of deposit?

A fixed rate certificate of deposit is a CD that has a set or fixed interest rate that is paid over the entire term of the instrument. The total fixed interest earned along with the CD principal is paid to the investor once the certificate of deposit reaches maturity.