What is a Certificate of Deposit?
A CD is similar to a savings account in that it is FDIC insured and virtually risk-free. However, a CD has a specific term, or length of time, that your money is held and typically has a fixed interest rate. The amount of time your money is held is often between three months and five years.
What are the benefits?
Certificates of deposit offer great rates with guaranteed returns. They offer a wide variety of terms that can fit your needs and they are FDIC insured.
What happens at the end of the CD's term?
Once the CD reaches maturity, you are able to withdraw your money or reinvest it into a new CD. CDs are self-renewing at maturity at the current interest yield offered for new certificates with similar terms. If you wish to withdraw money from your CD prior to it reaching maturity, you may face a substantial penalty.
