--- title: What a CD is and Why it's the Smartest Investment description: A CD can be a great investment for those who are looking for a fixed rate of return and want to lock in their money for a specific period. image: https://blog.bibank.com/hubfs/what%20is%20a%20cd.png --- FDIC-Insured - Backed by the full faith and credit of the U.S. Government [![bibank-logo](https://blog.bibank.com/hubfs/BankIndependent_October2025/Images/bibank-logo.svg "bibank-logo")](https://bibank.com/) [![svgviewer-png-output (11)](https://blog.bibank.com/hs-fs/hubfs/BankIndependent_October2025/Images/svgviewer-png-output%20(11).png?width=47&height=31&name=svgviewer-png-output%20(11).png "svgviewer-png-output (11)")](https://bibank.com/) - Personal - Deposit - [Compare Checking](https://bibankcom/personal/compare-checking) - [Independent](https://bibank.com/personal/independent-checking) - [Independent Plus](https://bibank.com/personal/independent-plus-checking) - [Independent Plus Student](https://bibank.com/personal/independent-plus-student-checking) - 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Common Searches - [Compare Personal Checking](https://bibank-2025.cms.banno-staging.com/personal/compare-checking) - [Contact Us](https://bibank-2025.cms.banno-staging.com/contact) - [Home Loans](https://bibank-2025.cms.banno-staging.com/personal/home-loans) - [Helping Hands Foundation](https://bibank-2025.cms.banno-staging.com/connect/helping-hands-foundation) - [Compare Business Checking](https://bibank-2025.cms.banno-staging.com/business/compare-checking) Routing Number 06​220​5791 ![What a CD is and Why it's the Smartest Investment](https://blog.bibank.com/hubfs/what%20is%20a%20cd.png) # What a CD is and Why it's the Smartest Investment - Home - [Bank Independent Blog](https://blog.bibank.com/blog) - What a CD is and Why it's the Smartest Investment [BI Marketing](https://blog.bibank.com/blog/author/bi-marketing) 10/06/2022 [Banking and Technology](https://blog.bibank.com/blog/topic/banking-and-technology), [Financial Fitness](https://blog.bibank.com/blog/topic/financial-fitness) [0 Comments](https://blog.bibank.com/blog/what-a-cd-is-and-why-its-the-smartest-investment#postComment) 3 Minutes ![what is a cd](https://blog.bibank.com/hs-fs/hubfs/what%20is%20a%20cd.png?width=1200&name=what%20is%20a%20cd.png) A certificate of deposit, or CD, is a type of savings account. It's a low-risk investment, and the funds are FDIC insured. When you open a CD, you agree to leave your money in the account for a specific amount of time, usually six months to five years. In return, the bank pays you a fixed rate of interest on your deposited amount. The longer the term of your CD, the higher the interest rate you'll earn. This is because the bank is taking on more risk by lending your money out for a longer period. CDs offer a low-risk investment option with a guaranteed return on your money. There are a few benefits to owning a CD: 1. The interest rates on CDs are typically higher than what you'll find on a regular savings account. 2. The money is locked in for a set amount of time, so you can't withdraw it until the term is over. This can be a good thing or a bad thing, depending on your circumstances. 3. CDs offer tax advantages that other savings vehicles don't.   ## How does a CD work? A certificate of deposit (CD) is a type of savings account. Unlike a regular savings account, a CD has a fixed term and a fixed interest rate. This means that you agree to leave your money in the CD for a set amount of time (the term), and the bank agrees to pay you a fixed interest rate on that money. The longer the term, the higher the interest rate. The minimum term for a CD is usually six months, and the most common terms are one, two, and three years. When the term is up, you can choose to renew your CD, roll it over into another CD with a different term, or take the money out and put it into your checking or savings account.   ## What are the benefits of investing in a CD? A certificate of deposit, or CD, is a type of savings account that typically offers a higher interest rate than a traditional savings account. This makes it a great option for those looking to save for the future, as the higher interest rate can help your money grow at a quicker rate. Another benefit of investing in a CD is that you can typically access your money whenever you need it, which is not always the case with other investment options. If you're looking for a safe and secure way to save your money, a certificate of deposit is a great option to consider.   ## How to choose the right CD for you CD rates can vary and so can the benefits offered by different banks. So, it's important to know what’s most important to you -whether that’s the rate or the relationship you have with your local bank. Another thing to consider is the minimum deposit required. Some banks may require a high minimum deposit, while others may be more reasonable. Think about how long you want to invest your money for. The longer you invest, the higher the rate of return will be. Lastly, make sure you're comfortable with the bank you're investing with. You'll want to feel confident that your money is safe and sound.   ## CD interest rates Another benefit of a CD is the interest rate. Unlike other investments, the interest rate on a CD is fixed for the entire term of the investment. This means you can be confident that you're getting the same return on your investment each and every month. Most banks offer competitive interest rates on their CDs, so it's a terrific way to save for your future while earning a little bit of extra income. We recommend shopping around to find the best rate for you.   ## FAQs about CDs A CD, or Certificate of Deposit, is a savings account that offers a fixed interest rate for a specific period. It's a low-risk investment option that can be a fantastic way to grow your money. Here are some frequent questions about CDs: - What are the benefits of a CD? The main benefit of a CD is that you can earn a higher return on your investment than you would with a regular savings account. You also know exactly how much interest you'll earn and when you'll receive it. - How do I open a CD? To open a CD, you may need to visit your local bank and speak with a banker. They'll ask you how much money you want to deposit and for how long you want to invest it. Many banks, including Bank Independent, offer Online Account Opening, which enables you to open a CD online in a few minutes. - What's the minimum amount I can deposit into a CD? The minimum amount you can deposit into a CD varies from bank to bank but is usually around $1,000. - Can I withdraw my money from a CD early? In most cases, yes. However, if you withdraw your money before the maturity date, you may incur penalties. In conclusion, a CD can be a great investment for those who are looking for a fixed rate of return and want to lock in their money for a specific period. This type of investment can be especially beneficial during times when the stock market is unstable. --- #### Tag: [Banking and Technology](https://blog.bibank.com/blog/topic/banking-and-technology) [Financial Fitness](https://blog.bibank.com/blog/topic/financial-fitness) #### Share: - [Follow us on Facebook](http://www.facebook.com/share.php?u=https://blog.bibank.com/blog/what-a-cd-is-and-why-its-the-smartest-investment) - [Follow us on Twitter](https://twitter.com/intent/tweet?url=https://blog.bibank.com/blog/what-a-cd-is-and-why-its-the-smartest-investment&text=What%20a%20CD%20is%20and%20Why%20it's%20the%20Smartest%20Investment) - [Follow us on Linkedin](http://www.linkedin.com/shareArticle?mini=true&url=https://blog.bibank.com/blog/what-a-cd-is-and-why-its-the-smartest-investment) - [Follow us on Pinterest](http://pinterest.com/pin/create/button/?url=https://blog.bibank.com/blog/what-a-cd-is-and-why-its-the-smartest-investment&text=What%20a%20CD%20is%20and%20Why%20its%20the%20Smartest%20Investmentdescription=A%20certificate%20of%20deposit,%20or%20CD,%20is%20a%20type%20of%20savings%20account.%20It's%20a%20low-risk%20investment,%20and%20the%20funds%20are%20FDIC%20insured.%20When%20you%20open%20a%20CD,%20you%20agree%20to[...]&media=https://377014.fs1.hubspotusercontent-na1.net/hubfs/377014/what%20is%20a%20cd.png) --- #### [The Orion Amphitheater Announces New Partnership With Bank Independent Previous Post](https://blog.bibank.com/blog/orion-amphitheater-announces-new-partnerships-with-bank-independent) #### [Bank Independent Named To Newsweek's List of the Top 100 Most Loved Workplaces for 2022 Next Post](https://blog.bibank.com/blog/bank-independent-named-to-newsweeks-list-of-the-top-100-most-loved-workplaces-for-2022) ### Leave a Reply This is a search field with an auto-suggest feature attached. - There are no suggestions because the search field is empty. ### Category - [Press Releases (151)](https://blog.bibank.com/blog/topic/press-releases) - [Financial Fitness (125)](https://blog.bibank.com/blog/topic/financial-fitness) - [Banking and Technology (101)](https://blog.bibank.com/blog/topic/banking-and-technology) - [Community Insights (59)](https://blog.bibank.com/blog/topic/community-insights) - [Culture (5)](https://blog.bibank.com/blog/topic/culture) ### Popular Posts [Bailey Lovell](https://blog.bibank.com/blog/author/bailey-lovell) 08/09/2017 [Banking and Technology](https://blog.bibank.com/blog/topic/banking-and-technology) [A Former Bank Teller Reveals Answer To Your Number 1 Question](https://blog.bibank.com/blog/a-former-teller-answers-your-most-asked-question) [Ashley Balch](https://blog.bibank.com/blog/author/ashley-balch) 06/11/2026 [Press Releases](https://blog.bibank.com/blog/topic/press-releases) [Bank Independent Promotes New Assistant Vice Presidents, Celebrating a Culture of Hard Work and Strong Leadership](https://blog.bibank.com/blog/bank-independent-promotes-new-assistant-vice-presidents-celebrating-a-culture-of-hard-work-and-strong-leadership) [Ashley Balch](https://blog.bibank.com/blog/author/ashley-balch) 09/13/2022 [Banking and Technology](https://blog.bibank.com/blog/topic/banking-and-technology) [The Complete Guide of How to Use a Contactless Debit Card](https://blog.bibank.com/blog/the-complete-guide-of-how-to-use-a-contactless-debit-card) [Ashley Balch](https://blog.bibank.com/blog/author/ashley-balch) 10/10/2023 [Banking and Technology](https://blog.bibank.com/blog/topic/banking-and-technology) [What is a Contactless Debit Card and Why Do I Need One?](https://blog.bibank.com/blog/what-is-a-contactless-debit-card) --- ## Related Posts [Financial Fitness](https://blog.bibank.com/blog/topic/financial-fitness) [Ashley Balch](https://blog.bibank.com/blog/author/ashley-balch) 28 April, 2026 #### [Set It and Forget It: Automating Your Finances](https://blog.bibank.com/blog/set-it-and-forget-it-automating-your-finances) Life moves fast. 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