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2 years ago

What happens when you put your money in a CD account?

1 answer:

6 0

A certificate of deposit (CD) requires you to commit to keeping your money in the account for a predetermined amount of time, which might be anywhere from a few months to several years. In return, you will receive a guaranteed return on your investment from the bank or credit union that provides your CD. This return will often be higher than the one you would receive from a standard savings account.

A certificate of deposit (CD) is a type of time deposit that is frequently offered by banks, thrifts, and credit unions in the US. Savings accounts and certificates of deposit (CDs) are different from one another since a CD often has a fixed interest rate and a set duration (commonly one, three, or six months). The bank anticipates that the CD will be kept until it matures, after which it can be withdrawn and interest collected. Similar to savings accounts, certificates of deposit (CDs) are guaranteed "money in the bank" (in the US, up to $250,000), making them virtually risk-free up to the local insured deposit limit. In the US, CDs are covered by the National Credit Union Administration (NCUA) for credit unions and the Federal Deposit Insurance Corporation (FDIC) for banks. Institutions typically give greater interest rates for deposits made by customers for a predetermined period of time than they do for demand-withdrawal accounts, though this may not always be the case when the yield curve is inverted. Although variable rates are not as prevalent as fixed rates, certain institutions do issue CDs with them.

Learn more about certificate of deposit here

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