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The chart to the left is for 6 month CDs.
A certificate of deposit, or CD, is an interest-bearing deposit account. However, unlike a savings deposit account in which the interest rate may fluctuate, a CD investment is guaranteed a specific rate of return.
The interest rate on a CD is higher than on a savings account because the investor, in exchange for receiving a guaranteed rate of return, commits to a specified period of time (the "term") during which he will not withdraw his investment. Common terms for CDs range from 30 days to 5 years. With most CDs, withdrawing any of the investment before the end of the term (the "maturity date") will incur an often substantial early withdrawal penalty.
A CD will not give you substantial returns compared to most other types of investments. Investopedia explains succinctly: "CDs are generally considered short-term, low-risk, interest-paying storage for capital until a more profitable investment can be found." CDs offer steady interest earnings, but not high returns.
However, with opt-up and bump offers, be aware that you won't necessarily get a bump up as high as the interest rate has actually risen. Also, the minimum investment for these accounts is often higher than with traditional CDs.
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When your CD maturity date nears, the bank or credit union will notify you. You can then do one of two things: