A certificate of deposit (CD) is a type of deposit that is held in a bank for a limited time and pays a certain amount of interest to the depositor. The money you put into the CD is completely protected by Federal Deposit Insurance Corporation. But, on a certificated of deposit your money is not as readily available if you need it before the term of the certificate expires.

On a certificate of deposit you get a higher rate of return than on a bank savings or money market account. The interest rate paid on certificate of deposits varies from one bank to another, so it is a good idea to shop around to find the best interest rate.

Certificate of deposits come in various period of time, such as 6, 12, or 24 months. You can also find a special CD designed specifically for college savings, so you can time your CDs to mature when your child is ready to attend college.