CDs

When you think of CDs, you probably think music. That’s not the case in personal finance! CDs stand for Certificates of Deposit. This is another type of account. When you deposit money into a CD, you agree to keep the money there for a specified period of time, anywhere from 3 months to several years. Typically, CDs offer the highest interest rate of standard accounts, but during the time that your money is in a CD, you do not have access to any of it. If you do withdraw the money early, you will be hit with a penalty. CDs also require a minimum investment. CDs can be offered at fixed interest rates (rates that stay the same) or at variable interest rates (rathes that change). If you are considering a CD, shop around for the CD that offers the best interest rate. It does not need to be at the same bank where you have a checking or savings account.

How can you be assured that money deposited in any type of account (checking, savings, money market) is secure?

Make sure your financial institution is FDIC insured. The FDIC generally protects the first $100,000 of deposits that are payable in the United States, but that value might change depending on current federal programs. For example, following the 2008 presidential election, the FDIC deposit insurance limit was raised to $250,000 per depositor until December 31, 2009.