A CD, or certificate of deposit, is a type of savings account with a fixed interest rate that’s usually higher than a regular savings account, a fixed term length and a fixed date of withdrawal, known as the maturity date. You lock up funds in a CD for a term generally between three months and five years.

Who regulates CD?

Like savings accounts, CDs are insured “money in the bank” (in the US up to $250,000) and thus, up to the local insured deposit limit, virtually risk free. In the US, CDs are insured by the Federal Deposit Insurance Corporation (FDIC) for banks and by the National Credit Union Administration (NCUA) for credit unions.

What are CDs in banking?

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.

What’s the interest rate on an old CD?

Because I did nothing, the CD rolled over to a new CD automatically for another 12 month certificate. Well, my old CD rate was 4.17%, and today (7/17/09) I went to the bank knowing my rate would be low – but they advised my new rate was .80% ! I was floored, .80% – that’s less than 1% I said – how could that be?

Which is type of CD account is best for You?

There are many different types of CDs to choose from. While CDs typically come with fixed rates, bump-up and step-up CDs allow account holders to increase their yield before the end of the term. Zero-coupon, callable and high-yield CDs potentially give you the chance to earn a more competitive rate and jumbo CDs require a high minimum deposit.

What is the interest rate on a liquid CD?

Liquid CDs, or no-penalty CDs, offer investors the opportunity to withdraw their money without incurring a penalty. The interest rate tied to a liquid CD may be higher than that of a savings or money market account. But it will likely be lower than the rate associated with a traditional CD of the same term.

What does it mean to buy a CD with no interest?

With zero-coupon CDs, you buy the CD at a discount to its par value, which is its value at maturity. “Coupon” refers to a periodic interest payment. “Zero-coupon” means there are no interest payments.