There are also different types of CDs with varying rates of interest or rates linked to indexes of various kinds, but the calculator can only do calculations based on fixed-rate CDs. Historically, interest rates of CDs tend to be higher than rates of savings accounts and money markets, but much lower than the historical average return rate of the equity market. As a type of investment, CDs fall on the low-risk, low-return end of the spectrum. Generally, the larger the initial deposit, or the longer the investment period, the higher the interest rate.
The lengthier the term, the higher the exposure to interest rate risk.
Common term lengths range from three months to five years. Related Investment Calculator | Interest CalculatorĪ certificate of deposit is an agreement to deposit money for a fixed period that will pay interest.
