Certificates of Deposit (CDs) Explained

July 14, 2008
By Mukesh Chatter

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At MoneyAisle, one of our goals is to make banking easy and enjoyable. We want to serve as a resource for young savers, first time depositors or anyone interested in learning more about the financial world. One of our first product offerings is Certificates of Deposit, so we thought it appropriate to offer some helpful hints about CDs and provide a few useful links for those interested in a more in-depth tutorial.

3 Key Things to Remember About CDs:

• Certificate of Deposit (CD) - A special type of deposit account with a bank or savings & loan institution that is held for a stated period of time and typically offers a higher rate of interest than a regular savings account. A fixed rate of interest is paid on the CD, usually at regular intervals. The rates of interest paid on CDs can vary widely across different banks and regions – and can be as wide as 2-4 percent points. MoneyAisle has banks bidding for your business in live auctions to provide you with great rates on CDs.

• CDs are insured by the Federal Deposit Insurance Corporation (FDIC) up to $100,000 per depositor per insured institution, or up to $200,000 per joint account per insured institution.

• Banks are allowed to charge a penalty for early withdrawal of the deposit. These penalties vary widely from bank to bank.

CDs are generally low-risk investments while other investments, such as stocks, can be more volatile and are not FDIC-insured.

Useful Websites:

• FDIC info on CDs and deposit insurance: http://www.fdic.gov/deposit/deposits/index.html

• U.S. Securities and Exchange tips for investors http://www.sec.gov/investor/pubs/certific.htm

• Forbes’ Investopedia: http://www.investopedia.com/

• About.com’s Investing for Beginners - http://beginnersinvest.about.com/cs/banking/a/062501a.htm

• The MotleyFool – http://www.fool.com

As we discussed in our blog post from MoneyAisle's launch, MoneyAisle enables depositors to capture the best CD rate available in our system, not just the best advertised rate.

We welcome any comments or questions you have about CDs or MoneyAisle, so please fire away.