Certificates of Deposit

Banking is when you are in the business of saving or keeping money for savings or checking accounts or for exchange or for issuing loans and credits. You do transactions in a bank, either depositing or withdrawing or getting a loan. Banks make their money transactions easier and at the same time profitable. One of a number of banking transactions is the Certificate of Deposit. What is a Certificate of Deposit?

When you go to a bank, make sure you know the products they are offering you. One way of keeping your money and gain savings is thru CD. What is a Certificate of Deposit? A Certificate of Deposit or CD is a time deposit. Withdrawing money before maturity will incur penalty. Most individuals will have to ask what a CD is. It is generally issued by commercial banks and insured by FDIC bearing a specified fixed interest rate and can be issued in any form of denomination. The term would normally range from one month to five years.

What is a Certificate of Deposit? It's different from a regular savings account in that the CD has a specific, fixed term, and usually has a fixed interest rate. It is specifically intended to be held until maturity, at which, by that time, may be withdrawn together with the accumulated interest. Savings accounts can be withdrawn and have lesser interest. CDs have higher interest rates as compared to a regular savings account.

After knowing what a certificate of deposit is, another question is how we acquire such. CDs require a minimum amount of deposit. Higher principal would get a higher rate. Being aware on what is a certificate of deposit would give you a clearer scope on its benefits and what you can earn. Upon opening a CD, a passbook or a paper certificate will be issued. Most banking institutions have arrangements with their customers to have their interest mailed as a check or transferred into their checking or savings account from time to time.

Another feature on what is a certificate of deposit is when you close it. Closing it before maturity will lead to penalty rate. When a CD nears its maturity date, the holder will receive a mail notification. You can also do "rolling it over" or once again tying it up for another period of time, otherwise, the holder may cash it upon maturity.

It's always best you know what is a certificate of deposit and know its features before you get to avail of its product. If you have not much use of your money, better invest in CD. You can save and at the same time earn interest over a period of time.

Ian Pennington is an accomplished niche website developer and author.

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