certificate of deposit (CD)

A certificate of deposit (CD) is an account where you’re required to leave your money for a set period of time (3 months, 6 months, 1 year, 5 years, etc.). A CD typically pays more interest than checking, savings, or money market accounts since your money is inaccessible to you for that time. If you have to withdraw your money during the term, there is a penalty (usually loss of interest paid). You’re trading the convenience of access to your money for a higher interest rate.