In a world of financial instruments and investment options, a Certificate of Deposit (CD) stands as a reliable and secure choice for those seeking stability and a fixed return on their savings. Let’s delve into what a Certificate of Deposit is and why it holds a significant place in personal financial planning. A Certificate of Deposit (CD) is a financial product offered by banks and credit unions that allows individuals to deposit a fixed sum of money for a predetermined period, known as the “term.” During this term, the depositor agrees not to withdraw the funds without incurring a penalty. In return, the financial institution pays interest on the deposited amount, usually at a higher rate than a regular savings account due to the longer commitment. Characteristics of a CD Term Length: CDs are available in various term lengths, ranging from a few months to several years. Shorter terms offer easier access to funds, while longer terms often come with higher interest rates. Fixed Interest Rate: Unlike some investment options that might have variable rates, CDs offer a fixed interest rate that remains consistent throughout