Certificate of deposit (CD),
Definition of Certificate of deposit (CD):
A certificate of deposit (CD) is a product offered by banks and credit unions that provides an interest rate premium in exchange for the customer agreeing to leave a lump-sum deposit untouched for a predetermined period of time. Almost all consumer financial institutions offer them, although it’s up to each bank which CD terms it wants to offer, how much higher the rate will be compared to the bank’s savings and money market products, and what penalties it applies for early withdrawal.
A certificate issued by a bank to a person depositing money for a specified length of time at a specified rate of interest.
Shopping around is crucial to finding the best CD rates because different financial institutions offer a surprisingly wide range. Your brick-and-mortar bank might pay a pittance on even long-term CDs, for example, while an online bank or local credit union might pay three to five times the national average. Meanwhile, some of the best rates come from special promotions, occasionally with unusual durations such as 13 or 21 months, rather than the more common terms based on 3, 6, or 18 months or full-year increments.
Receipt issued by a depository institution (such as a bank, credit union, or a finance or insurance company) to a depositor who opens a certificate account or time deposit account. Issued in a negotiable or non-negotiable form, it states the (1) amount deposited, (2) rate of interest, and (3) minimum period for which the deposit should be maintained without incurring early withdrawal penalties.
How to use Certificate of deposit (CD) in a sentence?
- CDs are a safer and more conservative investment than stocks and bonds, offering lower opportunity for growth, but with a non-volatile, guaranteed rate of return.
- The banker gave the client a certificate of deposit , so that he could be absolutely certain his last paycheck had indeed been deposited into his account.
- The top nationally available CD rates are typically three to five times higher than the industry average for every term, so shopping around delivers significant gains.
- I elected to purchase a certificate of deposit with the bank as I analyzed the investment opportunity and due to its safety I accepted it.
- Susan purchased a certificate of deposit from her bank in order to earn a higher interest rate on her money for the next two years.
- Virtually every bank, credit union, and brokerage firm offers a menu of CD options.
- Although you lock into a term of duration when you open a CD, there are options for exiting early should you encounter an emergency or change of plans.
- Even a slightly higher interest rate on a certificate of deposit can boost your returns.
- Top-paying certificates of deposit pay higher interest rates than the best savings and money market accounts in exchange for leaving the funds on deposit for a fixed period of time.
Meaning of Certificate of deposit (CD) & Certificate of deposit (CD) Definition