Definition
A bank deposit that pays a fixed interest rate for a set term, such as 6 months or 5 years, in exchange for leaving the money untouched.
The story
Lock in $5,000 for a year at a fixed rate and you know exactly what you'll earn. Take it out early and you usually pay a penalty. CDs at banks insured by the FDIC (Federal Deposit Insurance Corporation) are covered by deposit insurance up to the limit.
Why markets watch it
CD rates are one of the ways savers can lock in today's rates before the Fed changes them.
See it in the story
Connects to
We explain why it moves markets. What you do with it is your call. Commentary and education only. Not financial advice. All terms