A certificate of deposit (CD) is a financial product offered by commercial banks, where the depositor agrees to keep a certain amount of money with the bank for a predetermined period of time. In return, the bank pays a fixed interest rate on the deposited amount. This allows the bank to use the funds for lending and other investments, while providing the depositor with a secure and predictable return on their investment. As a knowledgeable investor, it is important to understand the potential risks and benefits of investing in CDs, including the impact of interest rates and early withdrawal penalties.
