In some cases, you could even lose some of your initial deposit. An early withdrawal penalty could offset some or all of the interest you earn on a CD. If you decide to withdraw your funds before the end of the CD term length, your bank will usually charge you an early withdrawal penalty. In exchange for this more competitive, fixed annual percentage yield (APY), you must agree to leave your cash in the account for a set period of time, called the CD’s term.

Credit unions call CDs share certificates.Ī certificate of deposit usually has a fixed interest rate higher than other deposit accounts, such as savings accounts, high-yield savings accounts, and money market accounts. A certificate of deposit (CD) is a special type of interest-bearing account you can open by depositing a lump sum with a traditional bank, state or federal credit union, or online bank.