Series 50: Certificates Of Deposit (CDs)

Certificates of Deposit (CDs)

A certificate of deposit is an investment vehicle that pays a fixed interest rate and has a fixed maturity date. CDs are issued by banks and are insured by the Federal Deposit Insurance Corporation (FDIC) up to a certain amount (usually $250,000). For investors who have savings built up, a CD generally provides a better return than a savings or checking account. However, investors are locked into the CD until maturity. If an investor withdraws money from the CD early, the bank will charge a penalty. Different banks require different minimum deposits, though $1,000 is a typical minimum.

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