What is a CD

A CD (Certificate of Deposit) is a low-risk deposit account that is payable at the end of a specified amount of time (often referred to as a term). CDs typically pay a fixed rate of interest and can offer a higher interest rate than other types of deposit accounts (depending on the market). These accounts provide security and peace of mind for longer-term savings with no monthly fees. It’s an alternative way to grow your savings on your terms.

CDs are available in various terms and can require varying minimum balances. The earned rate varies by the term and how much has been deposited into the account. If you need to access your funds before the end of the CD term, you will be required to pay an early withdrawal penalty.

When choosing a CD, think about the length of the terms available. If you need the money to mature sooner, consider choosing a CD with a shorter term or with penalty-free options. If you’re saving for something years in the future, a CD with a longer term and higher rate could be a better, more rewarding option.

Remember, the funds you place in a CD are no longer liquid funds you have immediate access to (without an early-withdrawal penalty). Before opening a CD, ensure you have an emergency fund in an easily accessible account.