Certificate of deposit (abbreviation: CD, C.D.) is a special account in which you should kept some amount for specified period of time and which earn you interest slightly higher than in a money market account or savings account.

The interest rate of your CD usually depends on:

• the amount that should be kept in that account. Banks propose CDs with:
  • fixed amount
  • minimum opening deposit/minimum opening balance.
• the specified term or duration - the end of that time period is called the “maturity date”. Banks propose CDs with:
  • fixed term, after that period your money will return to your checking account
  • just minimum term.

Usually for the longer term you can receive the higher interest rate.

Depending on the CD’s conditions, the interest can be paid in different ways:

• periodically - interests will be paid periodically (monthly, quarterly, yearly) to your card or account
• accumulating - interests accumulate in the CD
• end-of-term - interests will be paid only in the end of term.

There are various ways to deposit money to your CD, but it depends on the country and local bank conditions. Most banks can open you a CD only if you have an opened account in that bank (checking account, savings account, current account, etc.) or if you have any type of loans (mortgage, auto loans, refinance, etc.).

Ways of accessing money depend on the country and bank, but most banks provide only one way – return money to your account (checking account, savings account, current account, etc.) or card. If you would withdraw money before a maturity date, bank can charge penalties. These penalties will vary.

In USA, CDs offered by banks are insured (up to $250,000) by the Federal Deposit Insurance Corporation (FDIC), while those offered by credit unions are insured up to $250,000 by the National Credit Union Administration (NCUA).