Calculate the Future Value of a Certificate of Deposit (CD)
A Certificate of Deposit or “CD” is a type of savings certificate in which the holder deposits some amount of money (usually a minimum of $100) for a specified period of time. CDs are offered by most banks, credit unions, and thrifts and typically require a deposit timeframe of several months to several years. In exchange, they offer a fixed rate of interest that is higher than most traditional savings accounts and a guarantee of their safety from the federal government. While most CDs penalize the holder for early withdrawal, they can make a good investment choice for conservative investors who will not need the money until the CD matures.
Certificates of deposit in larger amounts and longer-timeframes usually offer higher interest rates than those of smaller amounts and shorter timeframes. While most CDs are offered with fixed-rates, some offer a “bump-up” feature, allowing for a one-time adjustment of the interest rate at some point during the term of the CD.
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The above information is educational and should not be interpreted as financial advice. For advice that is specific to your circumstances, you should consult a financial or tax advisor.
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