Certificate of Deposits, which are also called “CD’s” are investments products offered by most banks, and credit unions which guarantee your principal, and a steady stream of interest at a predetermined rate based upon how long you keep your money in the CD’s.
All CD’s have maturity dates, at either 3 months, 6 months, or 12 months, depending on how long you are willing to lock in your money for the interest. Obviously, the longer you “lock in” your money into a CD, the higher the interest rate(Example: 3month CD at .50% interest, or 12 month CD at 1.40% interest).
This is beneficial to the banks because of the simple fact that they use your money to fund their operations(They do this for EVERY bank product offered by the way, that’s how banks operate), and in return they give you interest and no risk guarantee on your money, backed by the FDIC.
They are really good investments because they offer little risk, a practical easy way to invest, and can be tailored to your investment time horizon. Most require at least $500.00 to invest into them.
If you need answers about the rates on individual CD’s, or the different techniques you can use to invest with CD’s, you can check out: