Certificate of Deposit (CDs)

Learn all about various types of certificates of deposit, how they work and how they potentially fit into your savings and investment planning. Browse Investopedia’s expert-written library to learn more.
Frequently Asked Questions
  • Can you build credit with CDs?
    CDs, along with other types of deposit products, do not build credit.  Only borrowing money through some type of loan from a financial services lender that reports to credit bureaus, like with a car loan, personal loan or credit card, can build a credit history.
  • Are CDs different from U.S. savings bonds?
    Yes, CDs are different from U.S. savings bonds in that CDs are a deposit account that have a fixed term held with commercial banks and U.S. savings bonds are debt obligations of the United States federal government. U.S. savings bonds also offer fixed terms that pay interest at maturity but provide longer term options compared to traditional CDs.
  • How can an individual invest with certificates of deposit?
    Investable funds can be deposited in certificate of deposit instruments of various terms with commercial banks, where they will earn fixed or variable interest that is payable at maturity.
  • Which is a better savings option - CDs or Money Market Savings?
    Certificates of deposit typically pay higher interest than money market savings accounts due to the fact that they are less liquid and involve a penalty for early withdrawal. Money market savings accounts allow for limited withdrawals but do not have a maturity date or early withdrawal penalty involved. The better option depends on whether yield maximization or flexibility is more important to your financial needs.
Key Terms

Explore Certificate of Deposits (CDs)

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Certificate of Deposit (CD) vs. Checking Account: Which Should You Open?
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Certificates of Deposit (CDs) vs. Savings Accounts: Which Is Better for You?
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CDs vs. Annuities: What's the Difference?
Investopedia custom visual assets shows a certificate and piles of change with the title Best 4-Year CD Rates
Best 4-Year CD Rates for February 2024
Investopedia custom visual asset shows a calendar and piles of change, with the title Best 3-Month CD Rates
Best 3-Month CD Rates for February 2024
Are Certificates of Deposit (CDs) Tax Exempt
Are Certificates of Deposit (CDs) Tax Exempt?
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What Is the Best Age to Invest in a CD?
Short-Term vs. Long-Term CDs
Short-Term vs. Long-Term CD Terms: What's the Difference?
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Step-Up Certificate of Deposit (CD)
What Happens to CDs After Death?
What Happens to My CDs When I Die?
When Is the Best Time to Buy a Certificate of Deposit
Best Time To Buy a CD
Should You Put CDs in an IRA?
Should You Put CDs in an IRA?
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Can You Trade Certificates of Deposit?
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Can You Fund a 529 Plan With a CD?
Do CDs Make Sense in a Rising Inflation Environment?
Do CDs Make Sense in a Rising Inflation Environment?
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How Many CD Terms Are There?
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How To Give a CD as a Gift
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How to Inherit a CD
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Annual Percentage Yield (AYP): What It is, How It Works
How to Open a CD for a Child
How to Open a CD for a Child
Are Online Certificates of Deposit Safe?
Are Online Certificates of Deposit (CDs) Safe?
History of CDs
Who Invented CDs?
How Many CDs Can I Have?
How Many CDs Can I Have?
Should You Have CDs at Multiple Banks?
Should You Have CDs at Multiple Banks?
What Are the Rules for CD Beneficiaries?
What Are the Rules for CD Beneficiaries?
 Investor comparing CD interest rates
Jumbo CDs vs. Regular CDs
Low interest rates
Does It Make Sense To Buy CDs When Interest Rates Are Low?
Pros and Cons of Certificates of Deposit (CDs)
Pros and Cons of CDs
Certificates of Deposit Pros and Cons
Are CDs Worth It?
How Does a CD Account Work?
How Does a CD Account Work?
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What Can CDs Be Used For?
Do CD Rates Go up When the Prime Goes Up?
Do CD Rates Go Up When the Prime Goes Up?
How to Close a CD
How to Close a CD
CD Account Opening
5 Steps to Open a Certificate of Deposit (CD)
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CD Early Withdrawal Penalty
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When Were Certificates of Deposit (CDs) Invented?
Certificates of Deposit vs. Mutual Funds
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Certificates of deposit might not seem like a good place to keep your money when interest rates are low, but they do offer security and stability.
Who Can Issue Certificates of Deposit?
A certificate of deposit (CD) is a common financial product sold by banks, thrift organizations, and credit unions.
Add-On CDs: Meaning, Pros and Cons, Example
Investopedia custom visual asset shows a tablet with a calendar and the title reads Best 5-Year CD Rates
Best 5-Year CD Rates for February 2024
Investopedia custom visual asset shows a computer with three stacks of change, with a title that reads Best 2-Year CD Rates
Best 2-Year CD Rates for February 2024
Investopedia custom visual asset showing a bank and a calculator and a document, with the title Best Bank CD Rates
Best Bank CD Rates for February 2024
Depositing Money Into a CD
How to Invest With CDs
Investopedia custom visual asset shows a calendar with a clock on it and change, with the title Best 10-year CD Rates
Best 10-Year CD Rates for February 2024
Investopedia custom visual assets shows a bank, a certificate, and a dollar bill, with the title Best 3-Year CD Rates
Best 3-Year CD Rates for February 2024
Investopedia custom visual asset shows a calendar, a laptop and piles of change, with the title Best 6-Month CD Rates
Best 6-Month CD Rates for February 2024
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Money Market Accounts vs. Certificates of Deposit
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