The full form of CD in commerce, specifically referring to a savings product, is Certificate of Deposit.
Understanding Certificates of Deposit (CDs)
A Certificate of Deposit is a type of savings account that typically offers a higher interest rate than a traditional savings account in exchange for the depositor agreeing to leave the money untouched for a predetermined period. This fixed term can range from a few months to several years.
Key Features of CDs:
- Fixed Term: Funds are locked in for a specific period.
- Fixed Interest Rate: The interest rate is usually fixed for the entire term.
- Penalty for Early Withdrawal: Withdrawing funds before the term ends usually incurs a penalty.
- Lump Sum Deposit: Typically requires an initial lump sum deposit.
According to the reference provided, a Certificate of Deposit (CD) is a savings product designed for individuals seeking higher interest rates on a lump sum over a fixed duration.
