Certificates of Deposit or a CD is an agreement between you and the bank or a credit union. You agree to keep your money in an account for a specific amount of time. They agree to pay you a higher rate of interest than you could get by depositing your money into a savings account. The agreement states:
How much money you deposited
The interest rate of the CD
The amount of time you must keep your money in the account
Financial instutions offer different kinds of CDs. The interest rate, the amount of money you deposit and the lenght of time of the deposit vary. All CDs are insured by the FDIC. This ensures that your money is safe.
CDs are less liquid than a saving account. They are based on a set time period. You are required to keep your money in the account for that time period. If you take you money out before the time has passed, then you'll have to pay a fee.
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