Certificate of Deposit

A certificate of deposit account is a type of savings product that is offered at most banks; this type of savings product can also be called a “CD”. When you open a certificate of deposit account, you will generally be required to place a certain amount of money into the account. The amount of money required may be a small amount or large amount, depending on which bank you want to start the account at. Many banks and credit unions do require that you place a minimum amount into the account. As with other banking products, the minimum amount typically does vary from one bank to another.

Once you deposit a bank-determined minimum amount of money into the certificate of deposit account, you will start earning a certain interest rate on the amount that you deposit. Interest rates on CDs tend to vary from bank to bank, but they are usually around the same amount at any given time. It is, of course, best to go with the higher interest-bearing account if you can do so. Be aware that some of the highest interest-bearing certificate of deposit accounts sometimes have a higher minimum initial deposit amount requirement than lower interest-bearing accounts do. It is highly beneficial to compare the interest rates for certificate of deposit accounts at several banks and credit unions before deciding to deposit your money into a CD.

Generally, any money that you put into a CD is insured by the Federal Deposit Insurance Corporation for up to $250,000, but it is always a good idea to make sure the bank or credit union that you are thinking about choosing to host your account is a member of the FDIC. You should not even consider placing money into a CD at a bank or credit union that isn’t an FDIC member.