A Certificate of Deposit (CD) is an investment vehicle offered by banks which guarantees a certain set amount of interest for a specified amount of time. Depositors are restricted from withdrawing money from the account, although they may still remove the money it is most often penalized a set amount of interest.
CD’s are offered in anywhere from 3 month to 5 year earning periods. Typically the longer you agree to let the bank hold your money the higher the interest rate is you are going to receive. A common way of maximizing your interest iearnings with a CD is by creating a CD Ladder.