Certificates of Deposit accounts otherwise known as CD Accounts are accounts utilized and popular among personal traders, which work similarly to bonds. However, unlike bonds investing in CD Accounts bring about large and unique advantages compared to fixed investments. Between CD and the typical bond, their main difference lies in the manner of paying the interest.
In CD accounts, the interest is paid on the maturity instead of periodically throughout your payments on the account. The primary reason why many people invest in CD Accounts is because of the protection from the Federal Deposit Insurance Corporation or FDIC although not all accounts are protected by the FDIC. CD Accounts are time deposit accounts, which will incur fees when you withdraw before the time of maturity. But there are risk-free CD accounts. The risk-free accounts have lower interest rates but you can withdraw all your funds without any penalty anytime you want.