Certificate of deposit, also called a CD, is a receipt issued by a bank for money placed in a certain type of savings account. Most CD accounts pay a higher rate of interest than do regular savings accounts. To open a CD account, a person must place a minimum amount of money in it and agree to pay a penalty if any of the money is withdrawn before a given date. The investment period ranges from 30 days to 10 years. When the investment period ends, the money can be withdrawn or rolled over into another CD. Some CD accounts require a minimum deposit of as little as $10. However, in general, the more money invested or the longer the investment period, the higher the interest rate. The rate usually stays the same throughout the investment period. Like other savings accounts, most CD accounts are considered safe because they are insured by the federal government.
