Certificates of Deposit (CDs)
A Certificate of Deposit (CD) locks in your APY for a fixed term in exchange for a higher rate than savings. Use CDs for money you won't need for 3 months to 5 years — and consider a ladder to stay flexible.
Frequently asked questions
What is a Certificate of Deposit (CD)?+
A CD is a time-deposit account that pays a fixed APY for a set term — typically 3 months to 5 years. In return for locking in your money, you get a higher rate than a standard savings account.
What is a CD ladder?+
A CD ladder splits your deposit across multiple terms (e.g. 6, 12, 18, and 24 months). One CD matures every six months, giving you regular access to your money while still capturing long-term rates.
What happens if I withdraw early from a CD?+
Most CDs charge an early-withdrawal penalty — typically 3 to 12 months of interest depending on the term. No-penalty CDs let you withdraw without a fee, often at a slightly lower APY.
Are CDs taxed?+
Yes. Interest earned in a standard CD is taxable in the year it accrues. CDs held in tax-advantaged accounts like IRAs follow that account's tax rules.
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