March 28th, 2009 [ Comments ]

How CDs Work

What is Certificate of Deposit? A Certificate of Deposit (CD) is a type of fixed-income investment product that is offered in banks and credit unions.  It is a short to medium-term investment which is fully insured by the FDIC up to $250,000. When investing in a CD, clients decide to put their money in the bank for a specific period of time, and in return, the bank pays them an agreed interest rate which is typically higher than the regular savings account. Banks usually impose a certain penalty for CD withdrawals made before the maturity or the end of the term.

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