Categories: Investor Definitions

CERTIFICATE OF DEPOSIT

A certificate of deposit (CD) is a savings account that holds a fixed amount of money for a fixed period of time, such as six months, one year, or five years.  In exchange, the issuing bank pays you interest.  When you cash in or redeem your CD, you receive the money you originally invested plus any interest.

Certificates of deposit are considered to be one of the safest savings options.  A CD bought through a federally insured bank is insured up to $250,000.  The $250,000 insurance covers all accounts in your name at the same bank, not each CD or account you have at the bank. 

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