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A '''certificate of deposit''' (CD) is a monetary option offered by [[bank]]s where a client can put an amount of money into a certicate that is then tied up for the length of the contract at a set rate of return. The longer the contract term, the greater the [[interest rate]] offered in most cases. Any attempt to take money out of the certificate of deposit before its expiration date would result in a monetary penalty.
Many certificates of deposit also offer graduated rates based upon the amount of money to be deposited or may have a minimum requirement to open a certificate of deposit. For those with graduated rates, the rates of return are usually greater for higher deposit amounts.
Ex. A CD may pay 5.00% interest for 9 months for deposit values < $10,000, 5.25% for amounts > $10,000 but < $50,000, or 5.50% for amounts over $50.000 with a minimum starting outlay of $2,000 to open the account.
[[Category:Economics]]
Many certificates of deposit also offer graduated rates based upon the amount of money to be deposited or may have a minimum requirement to open a certificate of deposit. For those with graduated rates, the rates of return are usually greater for higher deposit amounts.
Ex. A CD may pay 5.00% interest for 9 months for deposit values < $10,000, 5.25% for amounts > $10,000 but < $50,000, or 5.50% for amounts over $50.000 with a minimum starting outlay of $2,000 to open the account.
[[Category:Economics]]