What is a certificate of deposit ?

A certificate of deposit (CD) is a type of savings account that typically offers a higher interest rate than a regular savings account. When you open a CD, you agree to keep your money in the account for a set period of time, known as the term or maturity period, which can range from a few months to several years. In exchange for keeping your money in the account for the specified term, the bank or financial institution pays you a fixed interest rate on the amount deposited. If you withdraw your money before the CD matures, you may incur a penalty. CDs are considered low-risk investments and are often used by individuals looking to earn a higher return on their savings over a specific period of time.