A certificate of deposit can also be known as a CD. It is a financial product that works in a similar way to a savings account in that they are basically risk free and insured.

The basic way a certificate of deposit works is as follows. You put in a lump some of money and then wait a specified period of time. After this you can then withdraw your money plus the interest.

Normally throughout the time of the CD the owner is not able to take from the amount of money or add money to it. The duration of the certificate of deposit normally dictates the interest amount also. A longer CD duration will return a better interest rate.

The duration of a certificate of deposit can be as short as a month and as long as 10 years. CDs can be less riskier than other investments shuch as the stock market and they also offer a better interest rate than a basic savings account would do.

For further information regarding certificate of deposit please read our articles in this section.