A certificate of deposit, which is also known as CD, is an account. In this account, interest is applicable on saved money. Unlike other saving accounts, the interest rates on certificate of deposit account is fixed. It guarantees an investor to credit a specific amount of interest. The interest rates on certificate of deposit are higher than other saving accounts, in a case, when no withdrawal occurs until the time of maturity of account. Common time period for the certificate of deposit account is between 30 days to 5 years. If any withdrawal is done before the maturity of this account then penalty are charged on the depositors.

There are many benefits of rates on certificate of deposit account. Some are discussed as follows. A CD account pays a high rate of interest on the investments as compared with the traditional accounts. In addition, it has no risks of instability & risks related with the stocks, annuities and other types of investments. Most of the CD accounts are safe and risk free as the money invested in the FDIC insured (bank) or NCUSIF (credit unions). These accounts have insurance up to $250,000. These accounts give a pre-defined amount of interest, to keep you out of any fear of receiving less amount of interest.

Drawbacks of CD accounts: In these accounts, the required money for investment is higher than the requirement of money in saving accounts. The rate of interest is also dependent on the amount of investment. To achieve a higher rate of interest, one has to invest a high amount of investment. The investor cannot withdraw the money or a part of money before the maturity of account. If he withdraws the money earlier before the maturity period then a penalty charge is to be paid. Sometimes, the investors often lose a portion of their principle investment too.

The interest rates on certificate of deposit in few institutions are as follows: (1) first is Capital-One; it applies 0.50% interest rate on one- year term, 1.24% on 2 years term and 1.88% on 3 years term. (2) Second is Ally institution; it gives 1.90% interest on 9 months term, 1.48% on 1- year term and 1.64 on 1.5 years term. (3) Third is Bank of Internet; it gives 0.75% interest on 9 months term, 1.53% interest on 1-year term and 1.53% on 1.5 years term. (4) Fourth is AIG Bank; it gives an interest of 1.00% on 6 months term, 1.45% 0n one-year term and 1.59% on 1.5-year term.

Opening a CD account is very easy; you can open it either online or in a unit and mortar facility. The buyer has to fill a simple application form, which may require some personal information for identification. After filling it, funds transfer to a CD. When an account gets mature and the investor wants to remain stick with it then he has to do nothing. The accounts will itself rollover to extended period for the same term. If someone wants to transfer his money in another account, then he should express the institution to close the CD. The institute will transfer the money in any other saving account or money account. Person can make a final decision after comparing the interest rates.