Certificate of Deposit (CD)
A bank deposit account where you commit to leaving your money untouched for a fixed period (the term) in exchange for a guaranteed interest rate.
A certificate of deposit is a deposit account in which you agree to leave a fixed sum of money with a bank for a fixed period — the "term" — in exchange for a guaranteed interest rate. Common terms range from 3 months to 5 years.
The trade-off versus an HYSA is straightforward: in exchange for giving up access to the funds, you typically get a slightly higher rate, and you lock that rate in regardless of what happens to market rates afterward. In a falling-rate environment, locking in a CD rate can preserve yield. In a rising-rate environment, the inverse applies.
If you withdraw early, you pay an early withdrawal penalty — usually 3 to 12 months of interest, depending on the term length. Some "no-penalty" CDs exist but pay materially lower rates.
CDs are FDIC-insured up to the same $250,000 limit per depositor as savings accounts.