Certificates of Deposit (CDs)
Certificates of deposit allow bank, savings & loan, and credit union customers to receive higher interest on their deposits than a savings or checking account. To obtain the higher returns, customers must be willing to tie their money up for a fixed period, typically one month to five years. The longer the term, the higher the interest rate offered. If a customer wishes to withdraw money early, he will pay an “early withdrawal” penalty and forfeit some of his interest. Bank CDs are issued by a bank and offer up to $250,000 of FDIC protection. They are not considered securities. Bank CDs typically offer low yie