Calculate the Future Value of a Certificate of Deposit (CD)

By Stock Research Pro • February 14th, 2010

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.


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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