Certificate of Deposit (CD)
A CD is a savings product that locks your money for a fixed term — from a few months to five years — in exchange for a guaranteed, usually higher, interest rate. Withdraw early and you forfeit some interest, so CDs suit money you won't need until a known date.
The trade is access for certainty: the rate is locked for the term, but withdrawing early forfeits interest, typically three months' worth on a short CD and six or more on a longer one. That penalty is the reason not to commit money you might actually need. A ladder solves it by splitting the sum across staggered maturities — five equal rungs at one through five years means something matures every year while the rest keeps earning the longer rate. CDs are federally insured to the same limits as a savings account, which makes them a way to hold a rate when you expect rates to fall. Brokered and callable CDs behave differently and deserve their own reading.
Put it to work
CD Calculator
Calculate a certificate of deposit's value at maturity, the interest earned, and the true APY from any rate and compounding frequency.
Savings Calculator
Watch your savings account grow: enter your balance, monthly deposit, and APY to see the future value and every dollar of interest along the way.