Terms can range from several days to several years. Once you have chosen the term you want, the institution will generally require that you keep your money in the account until the term ends, that is, until maturity . Because you agree to leave your funds for a specified period, the institution may pay you a higher rate of interest than it would for a savings or other account. Typically, the longer term, the higher the annual percentage yield. Sometimes an institution allows you to withdraw your principal funds before maturity, but a penalty is frequently charged.
Penalties vary among institutions, and they can be hefty.
The penalty could be greater than the amount of interest earned, so you could lose some of our principal deposit. Institutions will notify you before the maturity date for most CDs. Often CDs renew automatically. Therefore, if you do not notify the institution at maturity that you wish to withdraw your money, the CD will roll over , or continue, for another term. Basic accounts give you a convenient way to pay bills and cash checks for less than you might pay without an account.