Certificates of deposit (CDs) are savings accounts that pay lower fixed rate of interest than a mainstream savings account over a given period of time.
Correct! Certificates of deposit (CDs) are savings accounts that typically offer a higher interest rate compared to a regular savings account. Unlike a regular savings account, CDs have a fixed term or period of time, usually ranging from a few months to several years. During this time, the money in the CD cannot be withdrawn without incurring a penalty. The interest rate on a CD is usually higher than that of a regular savings account because the account holder is agreeing to keep the money in the CD for the specified term.