Certificate of Deposit: The Facts

Banks bid in live auctions for your deposits.

One of the safest investments you can make is in a certificate of deposit, or CD. There are several things to remember when searching for the best certificate of deposit for your funds.
Read more below.

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Recent National Live Auction CD Rates
for November 20, 2009

Term National Avg APY* Overnight
Auction APY†
High-Yield Savings Account Rates 0.19% 1.64%
3 Month CD Rates 0.37% 1.50%
9 Month CD Rates 0.86% 1.75%
1 Year CD Rates 0.86% 1.92%
2 Year CD Rates 1.36% 2.21%

More National CD Rates

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*

Source: TheStreet.com

†

Overnight Auction APY is a sample rate for a nightly auction for a $50,000 deposit.

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Certificate of Deposit Facts

  • A certificate of deposit (CD) is a special type of deposit account that is held for a stated period of time. CDs generally offer a higher rate of interest than a regular savings account.
  • A fixed rate of interest is paid on the Certificate of Deposit, usually at regular intervals.
  • Certificates of Deposit are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000 per depositor per insured institution, or up to $500,000 per joint account per insured institution.
  • Banks are allowed to charge a penalty for early withdrawal of the deposit. These penalties may vary widely from bank to bank.
  • A certificate of deposit is generally a low-risk investment while other investments, such as stocks, can be more volatile and are not FDIC-insured.
  • Once the Certificate of Deposit has reached maturity (meaning the agreed-upon length of the CD has come to an end), the depositor has the option of withdrawing the money or "rolling it over" into a new CD, allowing the interest earned to compound further.

Get a Great Certificate of Deposit Rate

MoneyAisle is a completely new and innovative way to get a great rate on your Certificate of Deposit. Banks battle it out in live auctions for your money, getting you the best rate available in our system at the auction's end.

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