DEFINITION– A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate and can be issued in any denomination. CDs are generally issued by commercial banks and are insured by the FDIC. The term of a CD generally ranges from one month to five years.
USelfDirect EXPLANATION – CDs, or Certificate of Deposits, are FDIC insured bank deposits where the investor effectively lends money to a financial institution in return for a guaranteed return. Generally, these institutions turn around and lend this money out in the form of mortgages.