Q:
A: A CD is short for Certificate of Deposit. CD's generally pay more interest than a regular savings account, but there are catches. 1) If you decide you want to spend the money before the CD matures, it usually will cost you 3 months worth of interest. So don't get one unless you're actually not planning on spending it during the duration of the agreement. 2) You generally have 10 days after it matures to get your money back, or else it will roll back over, including he earned interest, back into a new CD for the same lenght of time the previous one was. 3) A 1-yr CD means you've locked your money up for 365 days. You may wish to check into a 3-mo or 6-mo CD as well. 4) If you decide you want to use the money prior to it maturing, you could take out a loan and pay only about 2%-3% more than what the bank is paying you in interest. So if your earning 5% on your CD, you could get a loan at 7-8%. 5) In my opinion, CD's are a much better investment than stocks and bonds as they are guaranteed by the goverment. Stocks and bonds you could loose all your money. 6) I've had CD's on and off since 1979 and absolutly love them. I put money in that I don't plan on spending, money I save for something specific, such as a house or land. 7) It usually takes a minimum of $1,000 to open a CD. 8) Speak to your banker, then go check other banks to see which one has the hightest interest rates, and maturity terms your looking for. 9) If you invest in a CD, make sure you put someone down as POD (payable on death) incase something should happen to you, they'll be able to cash in the CD w/o having to go through lawyers, escrow problems, etc.