Certificates of Deposit

  • Short term and long term
  • Automatically renewable
  • Penalty for early withdrawal

Certificates of Deposit or CDs are similar to savings accounts in that they are insured by the FDIC. They are different from savings accounts in that certificates have specific fixed terms.  The terms may vary from three months to five years. Also, certificates have fixed interest rates. It is intended that certificates be held until the maturity of the term, at which time the money may be withdrawn or rolled over into the same term or a different term.  Interest can be paid monthly, quarterly, annually or at maturity. CDs earn different rates for different terms. If certificates are withdrawn before the end of their terms, penalties will be imposed.