Which term describes money saved with an insured, fixed-term deposit at a bank?

• A. Certificate of Deposit (CD)
• B. Savings
• C. Investment
• D. Retirement Planning

Answer: (A)

Think of a certificate of deposit as the money you commit to keep in a bank for a specific period in exchange for a guaranteed interest rate. It’s an insured deposit, meaning government backing up to a limit protects your principal. The fixed-term aspect means your funds are tied up for a set duration—months or years—and typically you’ll earn more interest than a regular savings account. If you withdraw early, you usually face a penalty, which is part of the trade-off for the higher rate. This makes it distinct from a general savings balance, which you can access anytime and which may have a lower or variable rate, and from investments, which carry more risk and aren’t guaranteed. Retirement planning is a broader strategy, not a single deposit product.