Certificate of Deposit

A certificate of deposit is sold by banks, and credit in the United States. CDs typically differ from savings accounts in that the CD has a specific, fixed term before money can be withdrawn without penalty and generally higher interest rates. The bank expects the CDs to be held until maturity, at which time they can be withdrawn and interest paid. The interest rate remains constant throughout the CD's term. The interest rate may change based on market conditions, potentially offering higher returns but with increased uncertainty. Short-term CDs typically range from a few weeks to six months.Medium-Term CDs have terms of one to five years. Long-Term CDs extend beyond five years, offering higher interest rates but requiring a longer commitment. Interest can compound at different intervals (daily, monthly, quarterly), affecting overall returns. Penalties for withdrawing funds before maturity vary, ranging from a portion of earned interest to a percentage of the principal.