investing guide

Certificate Of Deposit

A certificate of deposit, also commonly known as a CD, is simply when a customers agrees to lend a bank money for a certain length of time. In return for the loan a bank will then pay the customer a certain rate of interest when the CD matures. Certificates of deposits are FDIC insured.

Certificates of deposit usually come with a lot of restrictions or penalties; especially if you were to withdraw the money before the CD matures.

This is why I think opening a high yield online savings account is a better choice because they have no such restrictions or penalties on withdrawals.