Certificate of Deposit

Definition:

Also known as CD. CD in family finance stands for certificate of deposit. It is a savings certificate offered by a bank or financial institution that offers a guaranteed interest rate for a fixed maturity date. 

Example:

She put her money in a 2 year CD to earn a higher interest rate.

More Information:

Certificates of deposits (CDs) are like a savings account in many ways. They are FDIC insured up to $250,000. Families and businesses often use them because they are very safe, and they can often earn a higher interest rate than just a traditional savings account. However, in exchange for the higher interest rate, your money will be locked up until the maturity date. If you elect to withdraw the funds sooner, you will be subject to a penalty.