Other than savings accounts, banks also sell certificate of deposit (CDs). A certificate of deposit is an account that requires you to keep the money on deposit for a specific length of time and premature redemption can result in interest penalties.
An interest rate of CD is typically higher than the bank’s regular savings account. CDs with longer terms to maturity typically offer higher annualized interest rates. The reason that CDs pay higher interest rates than savings accounts because the bank lends your money to people through credit cards or auto loans with higher interest rate than you will get, so the bank still get a good profit.
Interest rates are dependent on the maturity of the CD, and they also vary from bank to bank. If you are interested to buy CD, you should shop around for the best rate. Internet can be the quickest way to find out of interest rate from several bank and other finance companies that offer CD.
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