Glossary
CD (certificate of deposit)
A CD (certificate of deposit) is a bank deposit that earns a fixed APY for a set term, from a few months to five years or more, in exchange for a penalty if you withdraw early.
CDs at FDIC-insured banks and share certificates at NCUA-insured credit unions are insured up to $250,000 per depositor, per institution, per ownership category. At maturity there is a short grace period to withdraw before the CD renews.
Example
$10,000 in a 12-month CD at 4.25% APY
- Interest by maturity
- 4.25% APY for 12 months
- $425
- At maturity
- The deposit and its interest
- $10,425
What you get back$10,425
$10,000 you put in$425 of interest
Where you’ll see it on RateHerald
Related terms
- Early withdrawal penaltyWhat a bank charges for taking money out of a CD before it matures, usually stated as a number of days' or months' interest, such as 90 days' interest.
- APY (annual percentage yield)The percentage a deposit earns in a year, counting compounding: the figure banks must quote for savings accounts, money market accounts and CDs.
- FDIC insuranceFDIC insurance protects deposits at insured banks up to $250,000 per depositor, per bank, for each ownership category, if the bank fails; credit unions have the same cover from the NCUA.
Sources: FDIC: Deposit insurance