certificate of deposit

Certificate of deposit (CD)

Also called a time deposit this is a certificate issued by a bank or thrift that indicates a specified sum of money has been deposited. A CD has a maturity date and a specified interest rate, and can be issued in any denomination. The duration can be up to five years.

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certificate of deposit (CD)

A receipt, issued by a financial institution for a deposit of funds, that permits the holder to receive interest plus the deposit at maturity. Early withdrawal of CDs issued after October 1, 1983, results in a penalty of 30 days' loss of interest on maturities of one year or less, and loss of 90 days' interest on maturities over one year. See also add-on, callable CD, jumbo certificate of deposit, negotiable certificate of deposit, real estate certificate of deposit, term certificate, zero-coupon certificate of deposit.

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Certificate of deposit (CD). CDs are time deposits. When you purchase a CD from a bank, up to $100,000 is insured by the Federal Deposit Insurance Corporation (FDIC).

You generally earn compound interest at a fixed rate, which is determined by the current interest rate and the CD's term, which can range from a week to five years.

However, rates can vary significantly from bank to bank. You usually face a penalty if you withdraw funds before your CD matures, often equal to the interest that has accrued up to the time you make the withdrawal.

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certificate of deposit (CD)

A receipt for money deposited in a financial institution.

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Certificate of Deposit (CD)

What Does Certificate of Deposit (CD) Mean?

A savings instrument that guarantees to pay to the purchaser interest and principal. A CD has a maturity date (one month to five years) and a specified fixed interest rate and is issued in several denominations. CDs generally are issued by commercial banks and are insured by the FDIC.

Investopedia explains Certificate of Deposit (CD)

A CD is a promissory note issued by a bank. It is a time deposit that restricts holders from withdrawing funds on demand. If one purchases a $10,000 CD with an interest rate of 5% compounded annually and a term of one year, at the year's end, the CD will have grown to $10,500 ($10,000 × 1.05). Although the holder can withdraw money before maturity, this action may result in a financial penalty. CDs of less than $100,000 are called small CDs; CDs of more than $100,000 are called large CDs or jumbo CDs. Almost all large CDs, as well as some small CDs, are negotiable.

Related Terms:
• Banker's Acceptance—BA
• Commercial Paper
• Interest Rate
• Jumbo Loan
• Money Market