Definition:
An account used to loan money to a bank or credit union. The certificate of deposit (CD) earns interest at a fixed rate over a set period of time. The interest rate is usually a higher rate than a savings account, because the money cannot be withdrawn until maturity. If it is, the bank will charge a penalty.
Children may want to consider a certificate of deposit if they want to earn more interest than their savings account and won't need access to the money in the near future.
Also Known As: CD
