What is a Certificate of Deposit?
A certificate of deposit ("CD") is a short to medium-term, FDIC insured investment available at banks and savings and loan institutions. You agree to deposit a set amount of money in the bank for a certain amount of time and you are not able to increase the deposit amount except upon maturity. In exchange for doing so, you will be paid a predetermined rate of interest. Often, a penalty fee will be charged if the money is withdrawn from the CD before it matures.