What is a Certificate of Deposit?

A CD or certificate of deposit is an interest-bearing note issued by a bank. These are time-related notes that grow and are payable according to your contractual arrangement with the bank. The time period may vary from thirty days to ten years. Typically, the longer the maturity time period, the higher the interest earned. Early withdrawal results in forfeiture of a substantial portion of the interest.
Certificate of deposits are insured up to $100,000 per depositor if the issuing bank is a member of the Federal Depositors' Insurance Corporation (FDIC). Those issued by a Savings and Loan should be insured by the Federal Savings and Loan Insurance Corpo­ration (FSLIC).

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