What is a certificate of deposit (CD)?

A certificate of deposit (CD) is a type of time deposit account that pays interest. They’re popular savings tools among investors who don’t want to risk losing principal, but still want to earn returns. Many CDs offer higher returns than traditional savings accounts, however they may not offer as competitive of returns as other investments.

Should you open a certificate of deposit?

If you’re looking for a safe place to store your money while earning a return, you might be thinking about opening a certificate of deposit. A CD is similar to a traditional savings account, but your bank will pay you a higher interest rate in exchange for locking your funds away for a set amount of time. The catch for that extra earning potential?

What is a certificate of deposit & how does it work?

They include other assets like bonds, TIPS, and dividend stocks, as well as financial strategies like paying down debt, using high-yield savings accounts, and buying life insurance. A certificate of deposit (CD) is a type of bank account that pays interest based in part on how long you agree to keep your money deposited.