Certificates of Deposit

A certificate of deposit is also called a CD. A CD is a kind of savings account. With a normal savings account, you earn interest and can put money in and take money out of it any time you want to. With a CD, you earn higher interest because you have to leave it in the bank for a specified amount of time. These kind of savings accounts are for people who know they will not need to use this money for awhile.
This is how they work:

	You go to the bank and get information about their CDs. You can do this by getting a brochure or talking to someone at the bank. You can usually tell anyone who works at the bank what you want and they will guide you to the right person to help you.
	You need to make some choices with a CD. The bank will tell you what the minimum amount is for a CD. For example: The bank might not start up a CD account unless you have at least $500.00. If you had more than that, you could choose to put more money in the CD.
	The next choice you have is how long you want it to stay in the CD. The bank will tell you what kind of time choices you have. Some of these are: 6 months, 9 months, 1 year, and longer. It is important to figure out if you are going to need the money any time soon. For example: You start up a CD and need it for college. You would figure out how long it is before you need it, and set it up so that it matures (or ends) when you need it.
	The bank will give you a paper Certificate of Deposit that shows how much money you put into it and the length of time you chose to keep it in the bank. Before you leave the bank, make sure that the certificate agrees with what you chose. Keep the CD paper in a safe place.

     The one thing to keep in mind with a CD is that you shouldn’t take the money out before it is time for it to mature. It matures when it reaches the ending time that you chose. This is an account for money that you won’t be needing before its ending time. If you had an emergency, you could take out money, but the bank would charge you money as a penalty for doing that. The penalty might take all of the interest you might have earned or even some of the money you put into it.
     When a CD matures, the bank usually sends you a letter to let you know this. They do this so that you can come to the bank and take the money and interest out if you want to. This would end the CD. If you were to do nothing, most banks do something called a rollover. This means that the money and interest are ‘rolled over’ into another CD for the same amount of time as the first one was. This is not good if you planned to take it out and just didn’t get there on time. It is always important to keep track of when your CD will end. Don’t depend on the bank to let you know. Then, if the bank rolls over your CD, it will be because you chose to have that happen and not because you didn’t take it out. A rolled over CD has penalties for taking the money out early just like the original CD did.
     A great thing about a CD is the fact that you get a lot of interest. The longer amount of time you choose to keep your money in the CD, the more interest you get. It is always a good idea to ‘shop around’ for a CD. The amount of interest that a bank gives in interest can change a lot from bank to bank. CDs are a great way to save your money and safely earn more interest than you would normally get in a regular savings account.