How does a Certificate of Deposit (CD) work?

A certificate of deposit (CD) is an account that offers you a higher interest rate than a traditional savings account. In exchange, the money is left untouched for an agreed upon time. That period is known as the term length. You'll incur a penalty if you withdraw your funds before the term is done.

U.S. Bank offers a range of terms so you can choose how long your money can build interest and when you can withdraw it. The total amount of interest you earn on a CD is determined by the term length and your initial deposit. Typically, the longer your term length and the greater your deposit, the higher the interest you’ll earn. Different CD products offer you different term length options and require different initial deposits.