Consumers searching for relatively low-risk investments often turn to certificates of deposit (CDs).

Certificate of Deposit Meaning: In deposit terminology, the term Certificate of Deposit or CD refers to money market instruments of relatively short duration or savings accounts that pay a fixed rate of interest until a given maturity date. Also, funds placed in a Certificate of Deposit usually cannot be withdrawn prior to maturity or they can perhaps only be withdrawn with advanced notice and/or by having a penalty assessed.

Certificate of Deposit Example: For example, a Certificate of Deposit will often be used by individuals, businesses and financial institutions around the world as a means of storing their liquid funds for a fixed period of time for future use. In the retail market, a Certificate of Deposit is a relatively safe investment when provided by insured financial institutions such as banks, savings and loan corporations and credit unions that are usually regulated within the country in which they operate. Also, Certificates of Deposit are typically known as term deposits in countries like Australia, Canada and New Zealand, as time deposits in the United States, as bonds in Great Britain, and as fixed deposits in some other countries like India.

Consumers searching for relatively low-risk investments often turn to certificates of deposit (CDs). A CD is a special type of deposit account with a bank or thrift institution that typically offers a higher rate of interest than a regular savings account. Like all bank deposit products, CDs feature federal deposit insurance up to $250,000, per insured bank, for each account ownership category.