CD Rates: Certificate of Deposit Rates

CD, or certificate of deposit are covered by FDIC deposit insurance of $250,000 per individual per institution.

The bank CD, or certificate of deposit, is a simple but useful means of creating financial security for the future. A certificate of deposit (CDs) offers a fixed interest yield in exchange for a commitment to keep your deposits in the bank for a set period, known as a term. You can find a wide range in CD terms, from as little as one month to as long as five years or more.

The bank certificate of deposit is considered by many people to be among the safest investment opportunities that are available today because deposits held with FDIC member banks will be covered by FDIC deposit insurance of $250,000 per individual per institution.

Although most individuals purchase CDs directly from banks, many brokerage firms and independent salespeople also offer CDs. These individuals and entities – known as “deposit brokers” – can sometimes negotiate a higher rate of interest for a CD by promising to bring a certain amount of deposits to the institution. The deposit broker can then offer these “brokered CDs” to their customers.

At one time, most CDs paid a fixed interest rate until they reached maturity. But, like many other products in today’s markets, CDs have become more complicated. Investors may now choose among variable rate CDs, long-term CDs, and CDs with other special features.

Some long-term, high-yield CDs have “call” features, meaning that the issuing bank may choose to terminate – or call – the CD after only one year or some other fixed period of time. Only the issuing bank may call a CD, not the investor. For example, a bank might decide to call its high-yield CDs if interest rates fall. But if you’ve invested in a long-term CD and interest rates subsequently rise, you’ll be locked in at the lower rate.