A CD, or certificate of deposit, offers you a guaranteed rate of return in exchange for the promise that you will leave the amount in the bank for a certain period of time. The highest interest rate you receive depends on a variety of factors.
The longer you leave the money in the account the higher the interest rate you will receive because the bank can count on having that money to lend out. CDs can have a maturity date of 10 years or more.
The more money you leave in the CD the higher your interest rate will be because the bank can count on having more money to lend out.
As the rates of returns on other investments like the stock market and treasury bills rise and fall, so will the rates of CDs. CDs will usually offer a lower interest rate than the stock market because of the security they offer.
Many online banks will offer higher interest rates because they have a lower cost of operation.
If you put a large amount of money in a long-term CD, make sure that you will not need it before the CD matures otherwise you will have to pay a significant early withdrawal fee.
Several Web sites publish the highest current CD interest rates and update them on a regular basis. CD rates can change weekly or sometimes even more frequently.