Bank CDs, or certificates of deposit, are notes that say that a person is owed a specific amount of money back at some point in time, in addition to a rate of interest. Discover ways in which CDs differ with help from a portfolio manager in this free video on money management and personal finances.
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Do you ever wonder where a bank gets the money to lend to you if you're considering buying a house? Hi, this is Roger Groh at Groh Asset Management. One of the ways that they use to collect cash is through certificates of deposit. Those are just notes saying that they owe you your money back at some point in time, plus a rate of interest. CD's can take all types of twist, not all CD's pay interest, some CD's then take what interest might be in, invest it in stock calls, or some don't pay you any interest at all, some pay tax exempt interest. They all differ, and so there's no one form that is correct, other than you giving them money, and you expect it back on a certain date. There's been a big change in the CD market over the last year. While the United States government, and the governments of other countries stepped in to guarantee many CD's, not all are guaranteed though. You need to carefully read the perspectives to determine exactly what your risk is. Hope that helps. Remember, once you lend to them, then they can lend to you. I'm Roger Groh at Groh Asset, thank you very much for spending time with me.