Certificate of Deposit (CD)

byPaytm Editorial TeamLast Updated: November 14, 2025

Definition

A Certificate of Deposit is a short-term financial instrument issued by banks to raise funds for a fixed period at a fixed interest rate.

Features

It’s a negotiable and secure investment option usually offered to individuals or companies with surplus funds. CDs cannot be withdrawn before maturity without a penalty.

Example

A bank may offer a 6-month CD at 7% interest, providing guaranteed returns on investment.

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