Certificates of Deposit

Certificates of deposit (CDs) are low-risk deposit accounts that offer low but guaranteed rates of return but may charge a penalty if you withdraw the money before the CD matures.

Frequently Asked Questions

  • What kind of penalties do CDs have?

    The financial institution offering your CD typically charges you a fee if you decide to withdraw funds from your CD before it matures. These fees are usually equal to the interest you've earned over a certain number of months.

    Learn More: How CD Penalties Work and How to Avoid Them
  • Why do CD rates change so much?

    CD rates change based on the length of maturity and the current interest rate environment. If the rate environment is volatile, interest rates can change on a weekly basis.

    Learn More: Bank CD Rates
  • Do credit unions offer CDs?

    Yes, credit unions offer CDs and they often have some of the highest interest rates.

    Learn More: The Best Credit Union CDs
  • Do banks offer no-penalty CDs?

    Yes, there are several banks and credit unions that offer penalty-free CDs, also known as "liquid CDs." Typically, you'll be able to withdraw some (not all) of your deposit before maturity without paying a fee.

    Learn More: Liquid Certificates of Deposit

Key Terms

  • Brokered CD

    Brokered certificates of deposit (CDs) are CDs you buy through a financial intermediary instead of directly through your bank or credit union.


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  • IRA CD

    An IRA CD is a combination of an individual retirement account (IRA) and a certificate of deposit (CD).

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  • CD Ladder

    A CD ladder is a series of CDs that are set to mature over a predictable time frame. 

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  • CD

    A certificate of deposit, or CD, is a savings vehicle with a fixed deposit held for a fixed term and yielding a fixed rate of interest.

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  • 6-Month CD

    A six-month CD is a CD with a maturity of six months. After the six months are over, you can withdraw your deposit plus interest.

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  • Maturity Date

    A CD's maturity date is the date on which you can withdraw your CD. You may also have the option to renew your CD, extending the maturity date.

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  • Money Market

    A money-market account is a high-interest savings account that's similar to a CD and a checking account. Because of those similarities, money market accounts are often compared to CDs and can serve as an alternative to CDs.

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  • Bank CD Rates

    Bank CD rates are interest rates that banks pay for the CDs that they offer. These rates may be higher or lower than CD rates offered by credit unions.

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