Certificates Of Deposit (CD’s)

Certificates of Deposit, commonly referred to as CDs, are a cross between an investment and a savings account. CDs have federal deposit insurance up to $100,000- which is what sets it apart from the investment world, but they have much higher interest rates than the traditional savings account.

A certificate of deposit allows you to invest a specific amount of money over a specific period of time. There are certificate of deposits for as short as one year, for five years, or longer terms. The longer you keep your money in a CD, the higher the interest rate you will receive. When your time period has ended, and you cash out your certificate of deposit, you not only receive the original sum of money that you invested, but youll also get the interest that the money earned while invested.

While certificates of deposit are great ways to save money at high rates of interest, theyre not the best choice for people who may have to withdraw money from their CDs before the investment period of time has been reached. You can access the money youve put into a CD before the time is up, however, you will either give up some of the earned interest or pay an early withdrawal...