what is a certificate of deposit?

Answer 1

A certificate of deposit or CD is, in the United States, a time deposit, a familiar financial product, commonly offered to consumers by banks, thrift institutions, and credit unions.

Such CDs are similar to savings accounts in being insured—by the FDIC for banks or by the NCUA for credit unions—and thus virtually risk-free; they are "money in the bank." They are different from savings accounts in that the CD has a specific, fixed term—often three months, six months, or one to five years—and, usually, a fixed interest rate. It is intended that the CD be held until maturity, at which time the money may be withdrawn together with the accrued interest.

Answer 2

It is also known as a CD. You put a certain amount of money, sometimes there is a minimum deposit say of $1,000.00 into a CD and you earn interest, whatever the going rate is (can be as low as 2%). You can leave this money in the CD for whatever time period your choose, say 3 months, 6 months, 1 year, etc. If you decide to keep the money in the CD for say 3 months, then you are locked into whatever the present interest rate is for 3 months, no matter if the interest rate goes up or down, you are locked into that interest rate for the time period (3 months, 6 months, etc.) that you choose. If you decide to withdraw your money before the selected time period is up, there is usually a penalty to pay for early withdrawal. Hope this helps.