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Certificate of Deposit (CD)

A type of savings product that accrues interest on a single sum of money for a predetermined amount of time. Unlike savings accounts, CDs require that the money remain untouched over the full term to avoid penalties and lost interest. Savings accounts often provide lower interest rates than CDs as compensation for liquidity loss. The majority of consumer financial institutions provide certificates of deposit (CDs), although each bank is free to set its own conditions, rate of interest in comparison to savings and money market products, and early withdrawal fees.

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