What is a CD?

A CD (Certificate of Deposit) is a specialized deposit you can easily make at a bank or other financial institution. Interest is paid at regular intervals until the CD matures. At that time, you get your original deposit plus the earned interest. The great thing about CDs is that they let you get a much higher interest rate than a savings account while being a much safer option than investing in the stock market. Let’s take a look at some of the benefits of a CD.

- Earn interest during the term (most popular are between three months and five years).

- Must leave the deposit in the account for the entire term to avoid an early withdrawal penalty.

- Option of receiving the principal and interest at the end of the term, or rolling over the CD for another term.

- FDIC insured up to $250,000 per individual.