In the financial world, CDs (certificates of deposit) are still a reliable tool that will always be stylish.  For the first time since the Great Depression, Americans are spending more than they save. According to the U.S. Commerce Department of Economic Analysis, Americans have a negative savings rate of .05 percent. Many continue saving, but they're spending more than they're earning by using either accumulated wealth (home equity, 401(k) funds) or credit cards.

If you're looking to return to a positive savings rate, consider the benefits of a CD (certificate of deposit.)  When looking for a low-risk investment for their hard-earned cash, many Americans turn to certificates of deposit (CDs).

The ABCs of CDs
A CD is a special type of deposit account that typically offers a higher rate of interest than a regular savings account. Unlike other investments, CDs feature federal deposit insurance up to $250,000.

When you purchase a CD, you invest a fixed sum of money for a fixed period of time – six months, one year, five years, or more – and, in exchange, the issuing bank pays you interest, typically at regular intervals. When you cash in or redeem your CD, you receive the money you originally invested plus any accrued interest. If you redeem your CD before it matures, you may have to pay an “early withdrawal” penalty or forfeit a portion of the interest you earned.

Why people like CDs
With their low-risk and guaranteed principal, CDs are an investment choice for people who want to avoid the roller coaster ride of the stock market.
Source of Partial Information: SEC / MortgageLoan.com

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