Certificates of Deposit (CDs)

Definition

A certificate of deposit is a time deposit held for a fixed term at a stated rate, usually with a penalty for early withdrawal; federal law counts funds evidenced by a bank's certificate of deposit as deposits for FDIC insurance.^[1] Deposit insurance at banks and share insurance at federally insured credit unions, where the equivalent product is a share certificate, are capped at a standard maximum of $250,000.^[2]

Federal law

1. Federal Deposit Insurance Act, Act of Sept. 21, 1950, ch. 967, § 2 [FDIA § 3(l)], 64 Stat. 873, 874. Federal Deposit Insurance Act § 3(l) (12 U.S.C. § 1813(l)): defines 'deposit' to include funds evidenced by a bank's certificate of deposit. Official text: govinfo.gov, U.S. Government Publishing Office.
2. Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub. L. 111-203, § 335, 124 Stat. 1540. Permanently set the standard maximum deposit insurance amount (12 U.S.C. § 1821(a)(1)(E)) and credit union share insurance amount (12 U.S.C. § 1787(k)(5)) at $250,000. Official text: govinfo.gov, U.S. Government Publishing Office.