Member-only story
What Is A Certificate Of Deposit And How Do CD Ladders Work?
Savings of any kind is an absolute necessity to help you deal with unexpected emergencies and have money available for future spending needs and wants.
While savings accounts are great, you might want to earn more interest than you do on your savings account. If you’re hesitant to invest extra savings in real estate or the stock market, a Certificate of Deposit (CD) could be a good option for you.
A Certificate of Deposit (CD) typically pays a higher rate of interest than a standard savings account, but without the risk of other longer-term investments.
What is a Certificate of Deposit (CD)?
A certificate of deposit (CD) is a type of savings account with a fixed interest rate and a precise maturity date.
When you open a CD account, you make a deposit to a bank, credit union, or other financial institution for a specific time frame (term) at a guaranteed rate of return.
Most CDs do not have fees unless the money is withdrawn before the stated maturity date. Just like any other savings account at a financial institution, CDs are insured by the FDIC (up to $250,000).
