What is a time deposit?

A time deposit is an interest-bearing bank account that has a pre-set date of maturity. A certificate of deposit (CD) is the best-known example. The money must remain in the account for the fixed term in order to earn the stated interest rate. Time deposits generally pay a slightly higher rate of interest than a regular savings account.

What is a certificate of deposit (CD)?

A certificate of deposit (CD) is the best-known example. The money must remain in the account for the fixed term in order to earn the stated interest rate. Time deposits generally pay a slightly higher rate of interest than a regular savings account. The longer the time to maturity, the higher the interest payment will be.

What is a certificate of deposit & how does it work?

Certificates of deposit are time deposit accounts. They earn a fixed rate of interest on the money you invest for a fixed period of time. Unlike a savings account, CDs generally don’t allow you to withdraw the principal at any time during the term. If you withdraw money before the maturity date, you’ll often pay an early withdrawal penalty fee.