Certificates of Deposit, commonly referred to as CDs, are a type of account or investment vehicle sold by banks and other financial institutions. They are unique in many ways to regular savings or checking accounts, as well as other investment vehicles, like stocks and bonds. For savers who want to earn higher interest rates on their money, but don’t want to take the risks associated with the stock market, CDs might be just the place to stash your money.
Certificates of Deposit are like savings accounts, except that you agree not to take your money out for a certain amount of time. These time periods can vary from 3 months to several years. And in exchange for leaving your money untouched for so long, the bank will pay you a higher interest rate than they would on a regular savings account.
There are different types of CDs and the interest rates vary from bank to bank. To learn more, check out this article.