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CDs (certificates of deposit) are bank, credit union or savings and loan instruments that allow the depositor to lock in an interest rate for a specific period of time (e.g. six months, one year, five years). If the money is withdrawn from the CD before the CD matures, there is likely to be an early-withdrawal penalty -- often three month's interest. Generally, the longer the time period of the CD, the higher the interest paid.
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