These include insured savings accounts, certificates of deposit, FE and HH savings bonds, treasury securities, and government agency securities. Passbook savings accounts, credit union shares, and interest-bearing checking accounts generally are insured savings accounts. However, any interest earned is subject to federal and state income tax law. Money in a CD is tied up from a few months to six years or more depending on the terms of the specific CD you buy. A notice of withdrawal is required and a penalty imposed if you withdraw money before the CD matures.
Interest earned is higher than paid on insured savings accounts.
The longer you tie up money in a CD, the higher the interest rate earned. Interest is paid either at time of purchase or at maturity, depending on the policy of the financial institution. In most cases, the more money you invest, the higher the rate of interest earned. All earnings are subject to income tax. CD's are available from banks, savings and loans and credit unions.