A certificate of deposit, or CD, is a savings account with a fixed term and a fixed interest rate. In exchange for locking your money in for a set period, the bank usually pays a higher rate than a regular savings account.
The trade-off is liquidity. If you pull the money out early, you usually pay a penalty, so CDs work best for cash you know you will not need immediately.
They are useful when you want predictability, not flexibility. A CD tells you exactly what you will earn if you can leave the money alone until maturity.
This is general information, not professional financial advice. For decisions about your situation, talk to a qualified professional.
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