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Certificate of Deposit
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.