Certificate of Deposit (CD)
A time-bound deposit instrument with a fixed return, similar to term deposits.
Detailed Description
Certificate of Deposit (CD)
What is a Certificate of Deposit (CD)?
A CD is a financial product offered by banks and credit unions that allows deposits for a fixed term while earning interest.
What are the benefits of using a CD?
CDs provide a safe way to save money with higher interest rates compared to traditional savings accounts.
What happens when a CD reaches maturity?
Upon maturity, the account holder can withdraw the principal and interest or choose to reinvest in a new CD.
Are there penalties for early withdrawal from a CD?
Yes, most CDs impose penalties for early withdrawal, which can reduce the interest earned.
Is a CD insured?
Yes, CDs offered by banks are typically insured by the FDIC up to $250,000 per depositor, per bank.