Certificates of deposit (CDs) are a similar method of securing your finances to savings accounts, and are simply bearer instructions that usually pay a fixed term of interest, (3 months, 6 months or 1-5 years), and are considered to be very safe as they are insured by the Federal Deposit Insurance Corporation (on behalf of banks) or National Credit Union Administr5ation (on behalf of credit unions).

How do I purchase a CD?
You will need to match the minimum deposit to buy a CD, and most banks and credit unions offer more competitive rates for higher deposits, with the best rates on those who can put in an initial deposit of $100,000 or more, which are called ‘jumbo CDs’. However you will have to check carefully as some banks actually offer very low rates for the very high CDs. Once you have paid in the minimum deposit the bank/credit union will normally issue you with a paper CD certificate or passbook, but as a lot of banking is done online these days it is also common for CDs to just be noted on your account, with the details showing on your monthly statements and no hardcopy certificate issued.

Interest Payout
You can arrange to have the interest transferred to a checking or saving account, or mailed to you as a check, but for many banks and credit unions you will have to choose which option you want when you first open up the CD, and there will be no facility to change this over at a later date.

Closing a CD
There are financial penalties for closing CDs before the agreed term is up, and for example if you have a 5 year CD, it is common for the penalty to be at least 6 months worth of interest, which could be a very significant amount on any higher value CDs. It is advised that you leave your CDs to mature for the full term of the agreement, unless you can guarantee your money would be better invested elsewhere, or you have a desperate need for immediate cash.

CD Rates
You can easily check the latest CD rates by contacting your CD provider, or by going online and visiting websites such as bankrate.com.

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