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What is a certificate of deposit (CD)?

A certificate of deposit, or CD, is a type of savings account offered by banks and credit unions. You generally agree to keep your money in the CD without taking a withdrawal for a specified length of time. Withdrawing money early means paying a penalty fee to the bank.

When you shop for a CD, compare different offers by looking at the term (that is, the time you agree to leave your money in the CD), the interest rate you earn, and the amount of the penalty for withdrawing money before the end of the term.

Are CDs FDIC-insured?

CDs offered by banks are insured up to $250,000 by the Federal Deposit Insurance Corporation (FDIC), and those offered by credit unions are insured up to $250,000 by the National Credit Union Administration (NCUA).