In a regular savings account, checking account, or even under your bed, you can access your money at almost any time. But if you’re willing to temporarily part with some of your money, and want to make more interest than in a regular savings account, an investment known as a Certificate of Deposit might be right for you. Think of a Certificate of Deposit as a contract between you and your bank. You tell your bank you won’t touch this money for a specified amount of time. The bank then pays you an interest rate that is higher than if you simply keep this money in a regular savings account (where as you know you can withdraw it at anytime). Beware though, if you need your money before the CD expires, the bank will penalize you.
CDs are issued by banks usually in the amounts of $1,000 or more, although some banks can offer a starting minimum of $100 or $500. There is also something called a Jumbo CD, but this requires a minimum of $50,000 or $100,000. With all CDs you must agree to leave your funds in the bank for a predetermined period of time. CDs are offered for 3, 6, 9, 13, 24, 30, 36, 48 or 60 month periods. Because of the time commitment, CDs are sometimes called time deposits. There is no risk of losing your money when you put it into a CD since your funds are insured by the FDIC (Federal Deposit Insurance Corporation http://www.fdic.gov/index.html , up to $100,000.