A guaranteed return for a specific period of time.
How CDs Work
A Certificate of Deposit (CD) is a special type of deposit account that typically offers a higher rate of interest than a regular savings account. Unlike other investments, CDs feature federal deposit insurance up to $250,000.
When you purchase a CD, you invest a fixed sum of money for fixed period of time – six months, one year, five years, or more – and, in exchange, the issuing bank pays you interest, typically at regular intervals.
When you cash in or redeem your CD, you receive the money you originally invested plus any accrued interest. If you redeem your CD before it matures, you may have to pay an “early withdrawal” penalty or forfeit a portion of the interest you earned.
- Rates, terms, tiers and minimum deposits to fit your needs
- Interest compounds daily
- No monthly maintenance fee
- Automatically renewable
- Security of FDIC insurance coverage
- A penalty may be imposed for early withdrawal
- Interest earned can be reinvested or can be disbursed monthly, quarterly, annually or at maturity
- Disbursement may be automatically deposited to an assigned savings account, checking account or paid by check