What is a CD (certificate of deposit)? New to CDs

J

Joshi J

Member
Hey, sorry if this is a dumb question but I’m still learning about money stuff. My bank is offering a 12-month CD with a 4.50% APY and a 30-month CD at 3.55%. I don’t really understand what APY means or how this all works.

I’m 21 and trying to figure out ways to make some passive income because I’m seriously broke and it’s stressing me out. Is this something worth looking into? Would love any advice or simple explanations thanks in advance!
 
A CD is basically a savings account where you agree to leave your money untouched for a set period like 12 or 30 months. In return the bank gives you a higher interest rate than a regular savings account. APY = Annual Percentage Yield which includes compound interest. 4.5% is actually a solid deal right now!
 
Not a dumb question at all. We all start somewhere. CD = Certificate of Deposit. You give the bank your money for X months they give u interest. But you can’t touch that money without a penalty during that period.
 
Same boat here. I’m 23 and just opened my first CD. The APY means annual percentage yield..basically how much interest you earn in a year. That 4.50% is pretty solid right now.
 
APY = Annual Percentage Yield. It’s how much interest you’ll earn in a year taking compounding into account. So 4.5% APY means if u put $1,000 in, you’ll have about $1,045 after a year.
 
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