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
  • Who invests in CDs?

    CDs tend to be a good investment for people who want stable, low-risk investments. This could include first time investors, people who are close to retirement, or those who want to earn more interest on their cash than what they'd get in a high-yield savings account.

    Learn More: Why Open a CD?

Key Terms

  • 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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  • 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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  • 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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  • Step-Up CD

    A step-up CD is a type of certificate deposit (CD) with an interest rate that increases over time. A traditional CD typically has the same interest rate for its duration.

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  • Promotional CD Rate

    A promotional certificate of deposit (CD) rate is a higher-than-standard rate that banks offer customers who can meet certain requirements.

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  • Variable-Rate CD

    A variable-rate CD is a financial product that allows you to deposit money for a fixed amount of time with an interest rate that may fluctuate based on market conditions and other factors.

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  • Liquid CD

    A liquid certificate of deposit (CD), also called a "no-penalty CD," allows you to withdraw funds from the account before the term expires and pay no early withdrawal penalty for doing so. 

    Learn More
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