Want 4% on Your Savings? 5 Key Numbers to Know About CDs

Certificates of deposit are in the financial spotlight this year. The best CD rates are higher than 4% annual percentage yield even for one-year terms, which is worlds better than they were years and even months ago.

“If there has been any silver lining to the market turmoil investors have experienced over the past months, savers are experiencing it through opportunities to invest in safe instruments like CDs at improved rates,” Elisabeth Mesquit, certified financial planner and owner of the firm Soaring Investment Management in Portland, Oregon, said in an email.

Safety is what CDs are typically known for, and higher rates may sweeten the deal so that more people consider these bank accounts. Here’s a closer look at what they are.

Defining CDs: The ‘time deposit’ account

A certificate of deposit isn’t your everyday savings account. A CD is also known as a time deposit, and it’s clear why: Opening a CD requires you to choose a specific length of time for a bank to hold an…

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This article was written by Spencer Tierney and originally published on www.nerdwallet.com