A certificate of deposit (CD) is a special kind of savings account offered by banks and credit unions. It grows in value over a specific period of time, ranging from six months to five years. But unlike a regular savings account, you can’t withdraw funds during the term you select, making a CD more of a long-term savings vehicle than one designed for short-term gains.
If you open a CD with a three-year term, the funds will need to remain in the account for that amount of time. At the end of the three-year period, the CD will mature. You’re free to withdraw the funds or renew the CD for another term and continue earning interest. You’ll typically have five to ten days to decide how to move forward once the CD matures. The CD may automatically renew if you fail to notify the bank or credit union of your intentions.
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