# Certificate of Deposit (CD)

*Everyday Money — Finicade finance glossary*

A CD is a deposit locked with a bank for a fixed term — three months to five years — in exchange for a fixed interest rate. You're paid for giving up access: break it early and you typically forfeit three to twelve months of interest. Because the rate is fixed, a CD is a bet on rates falling; if they rise you're stuck below market. A CD ladder (equal amounts maturing each year) hedges that by rolling a slice at the new rate every year.

**Also known as:** CD, term deposit, fixed deposit

**Related terms:** [Savings Account](https://finicade.com/glossary/savings-account), [APY (Annual Percentage Yield)](https://finicade.com/glossary/apy), [Liquidity](https://finicade.com/glossary/liquidity), [High-Yield Savings Account](https://finicade.com/glossary/high-yield-savings-account), [Money Market Account](https://finicade.com/glossary/money-market-account)

Source: https://finicade.com/glossary/certificate-of-deposit