A savings account with a fixed term and fixed interest rate, higher than regular savings.
A Certificate of Deposit (CD) is a type of savings account offered by banks and credit unions where you agree to deposit money for a fixed period (called the term), typically ranging from 3 months to 5 years or longer. In exchange for locking up your money, you receive a historically reliable interest rate that is usually higher than regular savings accounts. CDs are FDIC-insured up to $250,000, making them very safe. The tradeoff is that withdrawing money before maturity typically results in an early-withdrawal penalty that eats into your earnings. CDs are ideal for money you don't need immediate access to and want to grow at a historically reliable rate without market risk.