Certificate of Deposit Rules

If you open a certificate of deposit, there are certain rules you have to understand. They can vary from bank to bank. If you don’t comply with the regulations, it could cost you money. CDs are instruments issued by banks to help you manage and save your money. You can receive higher rates of interest on CDs than you can with a savings account.

Grace Period

After your CD matures, there is a seven-day grace period that gives you time to decide what you want to do with your money. When a CD matures, you can roll it over for another term or take your money and close the account.


To open a CD, you will need $500 or $1,000.This requirement can vary from bank to bank.


If you take your money out of a CD before it matures, you will have to pay a penalty. Sometimes the penalty can be three months of interest.


CDs are insured by the Federal Deposit Insurance Corp. (FDIC). Each depositor is insured up to $250,000 through December 2009. This amount will decrease to $100,000 starting in January 2010.


The terms for CDs can range from three months to five years. The longer the term, the higher the rate of interest you receive.

Interest Rate

The interest rate on CDs is higher than the rate you will receive on a savings account.