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A CD, or Certificate of Deposit, is a savings instrument issued by a bank or thrift. The CD pays interest on deposits held for the term of the CD. The interest rate on a CD is usually quoted as an annual percentage yield, or APY and is determined by competitive market forces. CD yields tend to vary across institutions. Early withdrawal of funds deposited to a CD generally incurs a penalty. Typical periods for a CD are 1 to 6, 9, 12, 18, 24, 30, 36, 48, or 60 months. A CD is sometimes called a time deposit. A jumbo CD is a CD having a minimum denomination of $100,000. Individuals and institutions alike can use the CD as a low-risk way to earn interest income.

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