Certificate of Deposits

Certificate of deposits, or CDs, are an interest earning savings instrument issued by a bank or thrift in which funds must remain on deposit for a specified amount of time; withdrawals prior to maturity incur interest penalties. CDs are also called a time deposits.

There are some CDs that are callable. They generally pay more than regular CDs but can be called in by the bank at specific dates. When called, you get back your principle and interest earned up to the call date. Banks will call a CD if interest rates have gone down since the CD was issued.