What is a certificate of deposit?

Certificates of deposit, commonly known as CDs, are investment vehicles that offer higher interest rates than traditional savings accounts. Credit unions often call them share certificates. CDs are time-bound investments that require you to deposit a sum of money for a fixed amount of time, ranging from a few months to several years.

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.

Are certificates of deposit a good investment?

Certificates of deposit (CDs) generally pay higher interest rates than savings and money market accounts. CDs are a safer and more conservative investment than stocks and bonds, but offer lower opportunity for growth. You can find CDs at banks, credit unions, and brokerages.