Glossary | Bank Certificate of Deposits

A certificate of deposit (also known as a CD) with a bank puts a certain amount of money in a bank account for a fixed amount of time. In exchange for the time held, the bank will return the total amount of money held plus interest.

The interest is determined by the interest rate the bank agrees to pay. The interest rate generally goes higher for the longer amount of time the money is held by the bank until maturity. Maturity is defined as the time period agreed by the client and the bank ends for the bank to hold the money for the CD.

An early withdrawal by the client before maturity will most likely result in a penalty fee from the bank.

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