Published: 2026-08-15
This article provides general information for reference purposes only and does not constitute professional legal, tax, medical, or financial advice. Rules and programs may change. Always verify current details with official sources or consult a qualified professional.
What is a certificate of deposit (CD)?
A CD is a savings account that locks in your money for a fixed term, typically 3 months to 5 years, in exchange for a guaranteed interest rate. It offers higher rates than regular savings accounts but restricts access to your money.
How do CDs work?
You deposit a fixed amount for a set term and earn a guaranteed interest rate. If you withdraw before maturity, you may face an early withdrawal penalty. At maturity, you receive your principal plus interest.
How do I choose a CD?
Compare interest rates, terms, and early withdrawal penalties. Consider a CD ladder to balance rates and liquidity. Ensure you can lock up your money for the full term without needing it early.