Certificate of Deposit (CD)

Definition

A savings product offered by banks and credit unions that pays a fixed interest rate over a set period. In exchange for the higher, predetermined return, the investor agrees to keep funda on deposit until the maturity date. Early withdrawals typically incur a penalty. CDs are generally considered low risk and are often insured up to applicable limits by government-backed programs, such as the Federal Deposit Insurance Corporation (FDIC) in the US.