CDs, or Certificates of Deposit, are like savings accounts, but you have to deposit a specified minimum (usually at least $500) and you usually have to leave your money in the account for a specific period of time. The minimum, the rate of return and the amount of time that you must leave your money in the account varies by bank and type of CD. CDs typically earn significantly more interest than savings accounts or money market savings accounts do and the longer you’re willing to commit, the higher the interest rate you’ll earn. Be warned though, if you withdraw money from a CD before it matures, you will probably have to pay a penalty.
Banks are the most common place to open a CD. You’ll want to do some shopping around to find the CD that best fits your needs, keeping in mind the minimum opening balance and interest rate will differ from bank to bank. When opening a CD, you’ll have to provide the bank with basic information, such as your name, address, phone number and social security number, and you’ll need to have your deposit money. Some banks will allow you to open a CD online.